Which type of payment system typically incurs higher costs?

The choice of RTGS (Real-Time Gross Settlement) payment systems as incurring higher costs is accurate due to the nature and functionality of these systems. RTGS is designed to handle large transactions on a real-time basis, where each payment is settled individually and immediately. This high level of precision and immediacy ensures that transactions are final and irreversible, making RTGS systems particularly suitable for high-value payments and interbank transactions.

However, the infrastructure required to support RTGS, including extensive security protocols, technology investments, and operational costs associated with maintaining the system and ensuring its continuous availability, contributes to the higher costs involved. Additionally, since each transaction is processed individually and in real-time, the operational expense per transaction tends to be significantly greater compared to other systems that operate in batches or that involve peer-to-peer interactions.

In contrast, DNS (Deferred Net Settlement) systems aggregate transactions over a specified period before settling them, which helps reduce costs. Peer-to-peer payment systems can operate at lower costs due to their decentralized nature and often utilize existing infrastructure, while cryptocurrency payment systems can also vary in cost but are often characterized by lower transaction fees in some cases due to reduced intermediary involvement. Therefore, the distinctive features of RTGS systems make them more costly compared to