Detailed Comparative Difference Between NEFT, RTGS and IMPS

Difference Between NEFT, RTGS and IMPS

Living in this era, where all of us are knowingly or unknowingly, making transactions almost all the time, money transfer has been one of the most common and important things to do. transfer basically refers to the electronic transfer of money, initiated by one person to the other. Moreover, ever since demonetization happened in India, people’s interest has diverted from cash payments to online methods of payment, whether it is online or offline. With the facilitation of services like UPI, online banking, etc., the old-school methods of physically transferring money from one person’s bank account to the other’s through cheques, cash deposits at banks, etc. have been completely eliminated.

While there are multiple ways to transfer money, such as UPI, Digital wallet, Cheque, etc. this blog will focus on some of the most common ways- RTGS, NEFT and IMPS along with a detailed difference between NEFT, RTGS and IMPS.

Understanding NEFT

The following points will help you understand what is NEFT as a money transfer mode-

  • NEFT is a one-to-one payment facility
  • NEFT transactions can be processed only between the banks that offer NEFT-enabled services
  • Transactions made through NEFT do not take place in real-time; implying that it takes a few days for NEFT transactions to complete
  • Before December 2019, RBI had fixed timings during which NEFT transactions can be processed. Any NEFT transaction will be processed only between 8:00 AM and 6:30 PM from Monday to Friday, and 8:00 AM to 12:00 PM on Saturdays. However, from 2020, NEFT transactions can be performed 24*7
  • To transfer funds through NEFT, you must add beneficiaries on the internet banking portal of your required bank
  • There are no limits on the amount of NEFT transactions
  • There is a fee applicable on all NEFT transactions; the amount varies from Rs. 2.5 to Rs. 25, depending on the amount being transferred
  • As per RBI guidelines, the payments made via NEFT are processed and settled in batches of half-hour

Here’s how NEFT transactions work-

  • Log in to the your internet banking account
  • On the main page, click on ‘Fund transfer’
  • From the drop down menu that appears, select ‘NEFT’
  • Note that you need to ‘Add beneficiary’ to the list of beneficiaries in your account if you haven’t done so already
  • To add a new beneficiary, you need to click on ‘Add beneficiary’ option on the page
  • Enter the beneficiary’s required information such as his/her name, bank account number, IFSC, etc.
  • Click on ‘Confirm’ or ‘Add’
  • To authenticate this step, you will be asked to enter the OTP sent to your registered mobile number
  • After doing so, your action would be processed. It will take around 24 hours to add a beneficiary
  • Once the beneficiary is added to your account, you need to select the beneficiary details (to whom you need to send the money) from your list of beneficiaries
  • Enter the amount that needs to be transferred and confirm your transaction
  • Click on ‘Confirm’ and the amount will be transferred from your bank account to the other’s

Understanding RTGS

Listed below are some of the features of RTGS

  • Transactions made through RTGS are processed on a one-to-one basis
  • RTGS facility can be accessed at any time, on any day of the year
  • The Real Time Gross Settlement method is mostly used for transactions of high value
  • The RTGS service can be used using both online and offline modes
  • Since it is managed by the Reserve Bank of India, RTGS is a safe and secure method of transferring funds
  • RTGS allows the real-time transfer of funds
  • There are no additional charges applicable on the transactions made through RTGS
  • The RTGS services can be accessed at 24*7, throughout the year
  • The transactions to be made through RTGS can be initiated from anywhere using internet banking
  • All the RTGS transactions are backed legally; hence, there is minimal risk of frauds

Here’s how RTGS transactions work-

  • Log in to the your internet banking account
  • On the main page, click on ‘Fund transfer’
  • From the drop down menu that appears, select ‘RTGS’
  • Note that you need to ‘Add beneficiary’ to the list of beneficiaries in your account if you haven’t done so already
  • To add a new beneficiary, you need to click on ‘Add beneficiary’ option on the page
  • Enter the beneficiary’s required information such as his/her name, bank account number, IFSC, etc.
  • Click on ‘Confirm’ or ‘Add’
  • To authenticate this step, you will be asked to enter the OTP sent to your registered mobile number
  • After doing so, your action would be processed. It will take around 24 hours to add a beneficiary
  • Once the beneficiary is added to your account, you need to select the beneficiary details (to whom you need to send the money) from your list of beneficiaries
  • Enter the amount that needs to be transferred and confirm your transaction
  • Click on ‘Confirm’ and the amount will be transferred from your bank account to the other’s

Understanding IMPS

Following are the features of IMPS

  • IMPS transactions have a daily maximum limit of Rs. 1 Lakh
  • The charges on transactions made through IMPS vary between Rs. 5 to Rs. 15, depending on the bank’s conditions
  • IMPS transactions may also levy an additional service tax
  • Immediate payment service is a robust, real-time fund transfer option that offers 24*7 inter-bank fund transfer facility
  • IMPS offers instant transfer of funds within banks across the country, which is safe and economical for all the users
  • The immediate payment service works on both, internet banking and mobile platforms
  • This immediate payment service can be accessed at all times; even on public and bank holidays
  • Users can add beneficiaries through IMPS mobile platforms only by providing the receiver’s mobile number and MMID (Mobile Money Identifier)
  • IMPS transactions made through mobile phones do not require bank account numbers
  • Upon completion of an IMPS transaction, both the payer and the payee are notified by the bank immediately
  • Apart from transferring money from one bank account to another, IMPS can also be used to receive payments, make payments to other merchants, perform mobile banking transactions, etc.

Here’s how IMPS transactions work-

  • Login to your mobile/internet banking account
  • On the main page that appears, click on ‘Fund Transfer’ option
  • Select ‘IMPS’ as your method of fund transfer
  • Provide the beneficiary’s MMID and your MPIN to proceed
  • Enter the amount that needs to be transferred
  • Click on ‘Confirm’
  • You might be asked to authenticate the transaction by submitting the OTP sent to your registered mobile number
  • Enter the OTP and complete the transaction

Difference Between NEFT, RTGS and IMPS

The below table explains the differences between NEFT, RTGS and IMPS briefly-

30_Detailed-Comparative-Difference-Between-NEFT-RTGS-and-IMPS_2

To Conclude:

While all the three methods out of NEFT, RTGS and IMPS are equally beneficial and useful, each of these methods has its own advantages and disadvantages. Hence, you must choose either of these methods depending upon the amount to be transferred, the time period in which it needs to be settled, additional transaction charges, etc. For instance, if you want to transfer an amount which is less than Rs. 2 lakh on an immediate basis, then IMPS should be your choice. Similarly, if you want to transfer an amount more than Rs. 2 lakh on an immediate basis, then RTGS would be of help to you.

FAQs
What are the most common methods of online money transfer?
The various methods of online money transfer include RTGS, IMPS, NEFT, UPI and digital wallet. Each of these methods can be performed online and allow easy and fast money transfer facility.
Is money transfer free of cost?
In most domestic transactions, money transfer is free of cost. However, some banks may charge a minimal fee on money transfer through a specific method.
How much time does it take to transfer money online?
Online money transfer takes only a day’s time to complete. Various methods of money transfer like UPI or IMPS can be completed immediately.
Which is the best method for online money transfer?
All the methods of money transfer are useful depending upon the sender’s needs and preferences. For instance, if you need to transfer an amount more than Rs. 2 lakh, then you should opt for RTGS. If you need to transfer money to your landlord as your monthly rent, then UPI money transfer could be your preferred method. Similarly, if you wish to transfer a lesser amount immediately, then you may go for IMPS.
When should I use RTGS to transfer money?
RTGS is best suitable for transactions that must be settled in real-time, and that have a minimum amount of Rs. 2 lakh.
Is IMPS better than other modes of online money transfer?
IMPS can be considered better than other modes of online money transfer as it facilitates immediate transfer of funds. Additionally, this immediate payment service can be accessed even on bank and public holidays.
How do NEFT money transfers work?
As and when a user initiates a transaction through NEFT, it gets queued up. Every hour, these transactions are cleared in batches. It must be noted that NEFT transactions that are initiated after the bank working hours are automatically assumed to be automated transactions initiated using the Straight Through Process’ (STP) modes by the bank.
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