Which of the following is NOT a characteristic of DNS payment systems?

The correct choice is that payments processed instantly is not a characteristic of DNS (Deferred Net Settlement) payment systems. In DNS systems, payments are not executed in real-time; instead, they are accumulated and settled at specific intervals throughout the day. This allows participants to manage liquidity better and reduces the number of actual transactions that need to be processed simultaneously, thereby optimizing the overall efficiency of the payment system.

Unlike instant payment systems, which focus on providing immediate settlement and availability of funds, DNS systems rely on netting payments among participants. This means that rather than settling each transaction individually and immediately, the system computes the net amounts due between participants at designated times. Intermittent settlement throughout the day is also a defining feature of DNS systems, as it enables participants to settle their net obligations periodically rather than continuously.

The use of a clearing house is significant in DNS systems as well, as it acts as an intermediary that helps to facilitate and manage the settlement process, ensuring that the netting calculations are accurate and executed effectively.

Therefore, the instantaneous processing of payments does not align with the characteristics of DNS payment systems, as they rely on deferred settlement mechanisms rather than immediate transactions.