Digital payments in India: NEFT vs IMPS | 5 reasons people still use NEFT even when IMPS is instant

NEFT vs IMPS: Both payment systems are available 24×7, but they differ in how transactions are processed, transfer limits and the speed at which funds are credited.

Why use NEFT when IMPS can transfer money instantly? That question recently sparked a discussion on X, with users sharing their views on why someone might still opt for NEFT.

“If IMPS & NEFT, both are free... why do people even use NEFT?” one post asked.

In the replies, one user pointed to the ₹5 lakh per-transaction limit applicable to IMPS for most channels, while another highlighted differences in payment narration and transaction records.

The discussion, however, is not simply about one service being better than the other.

1. IMPS is designed for instant transfers

IMPS, or Immediate Payment Service, is a real-time interbank electronic funds transfer service operated by the National Payments Corporation of India (NPCI). It is available 24×7 and is designed to make funds available to the beneficiary almost immediately.

NEFT, in comparison, uses a half-hourly batch settlement system. While NEFT is also available 24×7, transactions are processed in batches rather than through real-time settlement.

2. IMPS has a ₹5 lakh per-transaction limit for most channels

NPCI states that the IMPS limit is ₹5 lakh per transaction for all channels except SMS and IVR. Individual banks may also prescribe their own limits.

This can become relevant when a customer needs to transfer a larger amount.

3. Both are available 24×7

NEFT and IMPS are both available round the clock, including weekends and bank holidays.

Therefore, 24×7 availability by itself does not explain why someone would choose NEFT over IMPS. The difference lies more in the settlement mechanism and the customer's requirement.

4. NEFT can be enough when immediate credit isn't required

If a transfer is not time-sensitive, NEFT's half-hourly settlement mechanism may be perfectly adequate. A customer may also simply be more familiar with NEFT or prefer the way their bank handles NEFT transactions.

5. Charges and banking features can vary

Whether a transfer attracts a charge depends on the bank, account and applicable product terms. Customers should check their bank's current charges and transaction limits before transferring money.

Other factors, such as payment narration, transaction records and the banking channel being used, may also influence a customer's choice.

IMPS (Immediate Payment Service) is a real-time interbank electronic fund transfer service operated by NPCI. It allows customers to transfer money between bank accounts 24×7 through channels such as mobile banking and internet banking, with funds generally credited to the beneficiary almost immediately.

The X discussion highlights a simple personal-finance point: when choosing between NEFT and IMPS, speed is only one consideration. The amount being transferred, urgency, transaction limits, applicable charges and the features offered by the bank can all influence which payment method a customer chooses.

What other payment methods are available?