Publication Type

Conference Proceeding Article

Version

publishedVersion

Publication Date

1-2015

Abstract

have made extensive use of interbank netting systems, in which payments are accumulated for end-of-day settlement. This approach, known as deferred net settlement (DNS), reduces the liquidity needs of a payment system, but bears inherent operational risks. As large dollar volumes of retail payments accumulate swiftly, real-time gross settlement (RTGS) is an attractive option. It permits immediate settlement of transactions during the day, but it brings up other risks that require consideration. We propose a hybrid payment management system involving elements of both DNS and RTGS. We explore several hybrid system mechanism designs to allow payment prioritization, reduce payment delays, enhance liquidity by pooling payments from banks, and optimize settlement. We provide a modeling framework and experimental set-up to evaluate the proposed approach. Our results shed new light about cost-effective and valuemaximizing mechanisms to quickly settle increasingly large volumes of retail payments.

Keywords

Delays, Real-time systems, Economics, Europe, Technological innovation, Mobile communication

Discipline

Computer Sciences | E-Commerce | Management Information Systems

Research Areas

Information Systems and Management

Publication

48th Hawaii International Conference on System Sciences HICSS 2015: 5-8 January, Kauai: Proceedings

First Page

4824

Last Page

4833

ISBN

9781479973682

Identifier

10.1109/HICSS.2015.573

Publisher

IEEE Computer Society

City or Country

Los Alamitos, CA

Additional URL

http://doi.ieeecomputersociety.org/10.1109/HICSS.2015.573

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