April 26, 2023

IMPS vs. NEFT: Key Differences And Benefits

If you use electronic payment systems, you should be familiar with IMPS and NEFT. Both of these are strategies for moving money from one bank account to another. Understanding how each of these methods of money transfer works might help you choose the best approach for your needs.

Let's go over these methods in depth!

What Exactly Is NEFT?

National Electronic Fund Transfer (NEFT) is one of India's most well-known electronic fund transfer platforms. NEFT was implemented in November 2005 by the Reserve Bank Of India (RBI) and is a service that allows bank clients to transfer money rapidly and securely from one account to another. A bank branch must be NEFT-enabled for a client to transfer money to another party.

Benefits Of NEFT

For cash transfer or reception, NEFT provides the following benefits:

Availability 24 hours a day, 365 days a year.
Near-real-time money transfers to the beneficiary account and secure settlement.
Pan-India coverage with a broad network of bank branches of various types.
A positive confirmation of credit to the recipient account is sent to the remitter through SMS or email.
A positive confirmation of credit to the beneficiary account is sent to the remitter through SMS or email.
Offers penal interest provision for late payment or return of transactions.
The RBI does not collect fees on banks.
There are no fees for online NEFT transfers for savings account holders.
In addition to cash transfers, the NEFT system can be utilized for a range of operations, such as credit card dues to card issuing banks, EMI payments, inbound foreign exchange remittances, and so on.

How to Transfer Funds Using NEFT

If you need to transfer funds via NEFT, follow these steps:

Log in to your banking portal if your bank is part of the NEFT transfer network.
Make the fund's receiver a beneficiary.
In the New Payee area, provide their individual information (name, account type, account number, IFSC code).
Select NEFT as your desired mode of transmission.
Fill out the transfer details (including the transfer amount) and submit it.
The transfer is now completed.

What Is IMPS?

Another form of online money transfer method is IMPS, which stands for Immediate Payments Service. It is a sort of Electronic Fund Transfer (EFT) and a nationwide payment system managed by the National Payments Corporation of India. Like NEFT, it is likewise available twenty-four-seven on all days of the week.

To link to bank accounts and process payments, IMPS employs the Aadhaar number or cell phone number. As a result, it is a safe method of fund transfer.

The Benefits Of IMPS

Aadhaar number, cell phone number, and MMID can be used to transfer funds.
IMPS sends you Credit and Debit Confirmation through SMS right away.
By using IMPS, the funds will be credited to the beneficiary's account in a matter of seconds.
IMPS is reliable, safe, and cost-effective.
The IMPS fund transfer has no minimum amount limit for fund transactions.
IMPS is available twenty-four hours a day, seven days a week, including holidays.
The customer can make both intrabank and interbank payments.
IMPS can be accessed by mobile phones, online banking, and ATMs.
Knowing the beneficiary's account number and IFSC while using IMPS is unnecessary.

How To Use IMPS To Transfer Money

Follow the steps below to make an IMPS money transfer:

Sign up for your preferred mobile banking service.
Create an MPIN and a Mobile Money Identifier (MMID).
Ascertain that the beneficiary client has the MMID as well.
Log in to your net banking account and choose IMPS as your desired way of transmission.
Fill out the form and submit the transfer.
Once the transfer has been sent, you will receive a confirmation text message.

Some Of The Major Banks That Provide NEFT And IMPS Services

Bank of Baroda
Central Bank of India
Axis Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank

Key Differences Between NEFT and IMPS

One crucial distinction between IMPS and NEFT Fund Transmission is that IMPS is an instant means of transfer of funds, whereas NEFT is not. The following are some other distinctions between the two-

NEFT falls into electronic banking, but IMPS is listed under mobile banking.
The NPCI primarily regulates IMPS, whereas the RBI mostly regulates NEFT.
While IMPS is swift and instant, NEFT takes a little longer because it depends on bank business hours.
IMPS is a direct transfer and a one-on-one settlement technique, whereas NEFT runs through clearance centres and delivers money to the beneficiary's account in batches.
You can make an IMPS transfer by logging into your online banking, mobile banking, UPI, or ATM. NEFT, on the contrary, is only available through internet banking if it is enabled.
You can perform cell phone-based/P2P (peer-to-peer) payments using MMID for IMPS but not for NEFT. You need to input all the bank details, such as the recipient's name, account number, bank's name, cell phone number, and IFSC code for NEFT. In IMPS, this is only required for P2A (phone-to-account) transactions. As a result, IMPS offers both possibilities, whereas NEFT does not.
IMPS payments are generally made online, although NEFT payments can be performed in person at a bank branch.
IMPS is more adaptable and less expensive than NEFT.
The transaction fees for NEFT and IMPS are also different. NEFT and IMPS fees are set at the discretion of the bank. NEFT fees start at ₹1 for each transaction and can reach ₹ 25 per transaction. IMPS charges typically start at ₹ 5 per transaction and can reach ₹15 per transaction. However, the RBI has eliminated the service costs that were previously applied to online NEFT transactions initiated over the internet or mobile banking.
There is no maximum or minimum limit for NEFT transactions, although the ceiling limit for money remittances and transfers to Nepal is INR 50,000 per transfer. In the instance of IMPS, there isn't a minimum limit, but the maximum transaction per transfer is limited to INR 200,000.

Conclusion

Transferring funds to another person was tough a few decades ago since it took a long time and people had to stand in line for hours to transfer a penny. However, with the advent of these technologies, the movement of money became so simple that people praised and advocated for such a reform in the financial system.

The sender of funds incurs transaction fees in both payment systems. Further, such rates may vary as per the respective slab. So, both money transfer methods offer advantages, and you can select the one that is most convenient for you.