India’s journey in digital payments is a story of innovation and inclusion. Two milestones stand out in this journey—Immediate Payment Service (IMPS) and Unified Payments Interface (UPI).
Both are products of the National Payments Corporation of India (NPCI), functioning under the oversight of the Reserve Bank of India (RBI).
- IMPS, launched in 2010, was the first system in India to make 24×7 interbank fund transfers possible.
- UPI, launched in 2016, went a step further by making payments simpler, free, and mobile-first, allowing transfers via a Virtual Payment Address (VPA/UPI ID) instead of requiring account details.
While UPI has become the most widely used payment system today, IMPS remains the backbone of real-time payments in India. Let’s understand the two in detail.
What is IMPS (Immediate Payment Service)?
According to NPCI, IMPS is a service that provides instant, interbank electronic fund transfers through multiple channels like mobile banking, net banking, ATMs, and SMS.
Key Highlights of IMPS:
- Launch year: 2010 (public launch on 22 November).
- Channels supported: Mobile banking apps, SMS, USSD (*99#), ATMs, and internet banking.
- Identifiers: Transfers can be made using Mobile Number + MMID or Account Number + IFSC.
- Availability: 24×7, 365 days, including holidays.
- Charges: Nominal charges may apply (₹1–₹25, decided by banks).
- Transaction Limits: Varies by bank, often higher than UPI.
Source: NPCI
What is UPI (Unified Payments Interface)?
UPI, launched in 2016, is also operated by NPCI and regulated by RBI. It was designed to simplify the IMPS process by making transactions possible with just a UPI ID or QR code.
Key Highlights of UPI:
- Launch year: 2016.
- Built on: IMPS infrastructure.
- Identifiers: UPI ID (Virtual Payment Address), QR code, mobile number linked to bank.
- Features: Supports both Push (send money) and Pull (request money) transactions.
- Charges: Free for individuals (as per RBI/government policy).
- Transaction Limit: ₹1 lakh per transaction (RBI standard; some categories like IPO or bills may allow higher limits).
- Availability: 24×7, including holidays.
Source: NPCI
UPI vs IMPS – Detailed Comparison
| Feature | IMPS (Immediate Payment Service) | UPI (Unified Payments Interface) |
|---|---|---|
| Launched by NPCI | 2010 | 2016 |
| Infrastructure | Core real-time interbank transfer system | Built on IMPS, adds mobile-first layer |
| Channels | SMS, USSD (*99#), ATMs, Net/Mobile Banking | Mobile apps, QR codes, UPI IDs |
| Ease of Use | Requires MMID/IFSC + account details | Only UPI ID / QR code required |
| Transaction Limit | Varies by bank, generally higher | ₹1 lakh per transaction (standard RBI cap) |
| Charges | ₹1–₹25 depending on bank | Free for individuals |
| Availability | 24×7, 365 days | 24×7, 365 days |
| Authentication | OTP / MPIN | UPI-PIN (linked to mobile |
1. Difference in Purpose
- IMPS: Introduced as a fund transfer mechanism. The goal was to make interbank transfers instant and available 24×7, replacing older systems like NEFT (batch-based) and ECS.
- UPI: Designed as a digital payment ecosystem. Beyond bank transfers, UPI enables bill payments, merchant payments via QR, subscription-based auto-debits, IPO applications, and even cross-border transactions.
Key Difference: IMPS = money transfer system, UPI = comprehensive digital payment platform.
2. Difference in Access & Channels
- IMPS: Accessible through multiple banking channels — net banking, mobile banking apps, ATMs, SMS, and even USSD (*99#). It works on both smartphones and feature phones.
- UPI: Primarily mobile app-based. You need a UPI-enabled app (Paytm). Transactions are tied to smartphones and internet connectivity.
Key Difference: IMPS is multi-channel and works even without internet, while UPI is mobile app and internet-first.
3. Difference in User Experience
- IMPS: Requires detailed information such as Account Number + IFSC or Mobile Number + MMID. This makes it slightly complex, especially for first-time users.
- UPI: Requires only a UPI ID or QR code. Once set up, users don’t need to remember bank details.
Key Difference: IMPS = detail-heavy, UPI = frictionless.
4. Difference in Transaction Limits
- IMPS: Limits are set by banks. RBI allows flexibility, so banks can permit higher-value transfers (commonly ₹2 lakh and beyond).
- UPI: Standard cap is ₹1 lakh per transaction (RBI guideline), though certain cases like IPOs or merchant transactions may allow higher limits.
Key Difference: IMPS often supports higher-value transfers, UPI is focused on everyday transactions.
5. Difference in Cost to Users
- IMPS: Banks may charge ₹1–₹25 per transaction depending on the amount.
- UPI: Free for individuals (zero charges as per RBI/government). Merchants may pay a small MDR for high-value payments.
Key Difference: IMPS may cost you per transfer, UPI is free for regular users.
6. Difference in Use Cases
- IMPS: Ideal for peer-to-peer transfers where larger amounts are involved, or when users don’t use apps.
- UPI: Suited for everyday payments — shopping, utilities, bill payments, subscriptions, and P2P transfers.
Key Difference: IMPS is a fund transfer tool, UPI is a universal payment tool.
7. Difference in Security
- IMPS: Uses bank-grade authentication — OTP, MPIN, and IFSC validations.
- UPI: Uses two-factor authentication as per RBI guidelines — device binding (mobile linked to account) + UPI PIN.
Both are secure, but UPI adds a layer of device-level security and is designed for app-based payments.
Conclusion
IMPS and UPI are not competitors but milestones in India’s digital payments journey.
- IMPS (2010): A breakthrough that gave India the power of instant 24×7 bank-to-bank transfers, ensuring convenience and speed.
- UPI (2016): Built on this foundation to create a unified, mobile-first ecosystem that powers billions of everyday transactions, from splitting bills to shopping online.
Together, IMPS and UPI highlight how India, under the guidance of RBI and NPCI, has moved from enabling banking convenience to building a cashless, digital lifestyle for millions.
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