Difference Between IMPS and NEFT Fund Transfer

22 February, 2024

Synopsis

• IMPS vs NEFT differ primarily in transaction speed and limits, with IMPS offering quick transfers of up to ₹5 lakh, while NEFT is preferable for larger, scheduled transfers.

• IMPS is managed by NPCI while NEFT is backed by the RBI.

• Both NEFT and IMPS are available round the clock.
  
  

In the digital age, the way we handle our finances has transformed drastically. Among the plethora of options available for digital transactions, Immediate Payment Service (IMPS) and National Electronic Fund Transfer (NEFT) stand out as popular choices. However, there's often confusion regarding the difference between IMPS and NEFT. Let us dive deep into what each of these services offers and how they differ and understand the IMPS vs NEFT question.

What is IMPS?

Immediate Payment Service (IMPS) is a revolutionary payment system that offers an instant, 24x7, interbank electronic fund transfer service through mobile banking.

Developed by the National Payments Corporation of India (NPCI), IMPS is remarkably straightforward since it does not necessitate the recipient's bank details. You send money using a Mobile Money Identifier (MMID) – a unique 7-digit number provided by banks specifically for IMPS transactions. Note that besides MMID, you can send money via IMPS using the recipient’s account details, viz., account number, bank name and branch, Indian Financial System Code (IFSC), etc.

To utilise IMPS, one must have internet or mobile banking activated, and their mobile number linked with their bank account.

IMPS Charges

The charges for fund transfers via IMPS are determined by member banks. You can check the charges with your bank.

Key Features of IMPS:

• Instant fund transfer: IMPS facilitates immediate transfer of funds, making it highly efficient for urgent transactions.

• Accessibility: Available round the clock, including weekends and holidays, ensuring users can conduct transactions at any time.

• Ease of use: Simplifies transactions by requiring minimal details such as the recipient's mobile number and MMID, making it user-friendly.

• Transaction limit: Suitable for smaller transactions, with a daily cap of ₹5 lakh.

• Safety and security: Ensures secure transactions, safeguarding users against fraud and unauthorised access.
  
  

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What is NEFT?

NEFT stands for National Electronic Fund Transfer, a system introduced by the Reserve Bank of India (RBI) to facilitate electronic transfers of funds from one bank account to another. It is widely used for both personal and business transactions due to its reliability and nationwide coverage. NEFT is available round the clock, 24×7, 365 days a year.

NEFT Charges

Regarding transaction charges, NEFT ensures a cost-free experience for incoming transactions. This means that recipients do not incur any charges when funds are sent to them using NEFT. However, for outgoing transactions, the sender is required to pay a nominal fee:

• For transactions up to ₹10,000: not exceeding ₹2.50 + taxes

• For transactions above ₹10,000 and up to ₹1 lakh: not exceeding ₹5 + taxes

• For transactions above ₹1 lakh and up to ₹2 lakh: not exceeding ₹15 + taxes

• For transactions above ₹2 lakh: not exceeding ₹25 + taxes

RBI has advised the banks to not levy charges on NEFT transactions initiated online. Therefore, most banks, like HDFC Bank, offer free NEFT using the bank’s NetBanking and Mobile Banking platforms.

Key Features of NEFT

• Nationwide network: NEFT enables fund transfers across a vast network of banks throughout India, making it a nationwide solution for electronic fund transfers.

• No limits: NEFT does not impose a minimum or maximum limit on the transaction amount, making it versatile for several types of transfers. However, for cash-based transfers, there might be a limit imposed by individual banks.

• Scheduled batch transfers: NEFT operates in hourly batches, which means transfers can be slightly delayed compared to real-time transfer systems. However, it ensures a high level of reliability and orderliness in processing.

• Charges and fees: NEFT transactions typically involve nominal charges, which vary depending on the amount being transferred. However, the RBI has waived off charges for NEFT transactions initiated through internet and mobile banking to promote digital transactions.

• Secure and Traceable: NEFT is known for its security and the ability to track transactions. Each NEFT transaction has a unique Transaction Reference Number that helps in tracking.
  
  

IMPS Vs NEFT

Here is the fundamental difference between IMPS and NEFT fund transfer:

• Regulatory bodies: While understanding IMPS vs NEFT, note that the NPCI primarily regulates IMPS, whereas NEFT falls under the purview of the RBI. This difference in regulatory bodies leads to distinct operational frameworks for both services.

• Transaction speed: The most notable difference in the IMPS vs NEFT debate is the speed of transfer. IMPS offers quick transfer of funds, which makes it ideal for urgent transactions. NEFT, in contrast, processes transfers in batches.

• Operational timings: In understanding IMPS vs NEFT, remember both fund transfers are available 24x7, including weekends and bank holidays.

• Transaction limits: Another thing to remember while understanding IMPS vs NEFT is the cap on each transaction. IMPS transactions have a cap of ₹5 lakh per transaction, making it suitable for smaller transactions. NEFT, on the other hand, comes with no limit on the maximum and minimum amount that can be transferred.

• Transfer mechanism: When we further analyse IMPS vs NEFT, we observe that IMPS is a direct transfer system that operates on a one-to-one settlement basis. NEFT works on a Deferred Net Settlement basis.

• Usage convenience: To understand IMPS vs NEFT better, know that for IMPS, besides the account number, the user can use the recipient's mobile number and MMID (Mobile Money Identifier), while NEFT transactions only necessitate detailed beneficiary bank information like account number and IFSC code.

• Transfer modes: You can send money via NEFT through the bank’s online banking channels or visit the bank branch and initiate the process offline. IMPS, on the other hand, can only be initiated online.
  
  

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