IMPS vs NEFT in Banking: Difference Between IMPS and NEFT Fund Transfer

With the need for banking service digitization becoming imminent, we’ve seen many digital payment services come to life, including NEFT and IMPS. These two services are fast becoming some of the best available to customers. Although they provide digital payment services, these transfer options have many discrepancies.

Both IMPS and NEFT are used widely across India and form the backbone of many digital transactions. This reflects the broader evolution of digital payments in India.

What Is National Electronic Funds Transfer (NEFT)?

National Electronic Funds Transfer (NEFT) is one payment service that enables funds transfer between participating banks and institutions. It was created by the Reserve Bank of India and is operated by the same agency. In addition, it has PAN India coverage.

With NEFT, the requests are typically settled within a half-hour through the netting. The service is available 24/7, meaning that users can transfer money any time of the day. Also, users without bank accounts can use the service and do so offline. The only issue with this payment system is that it is not immediate. It takes some time for the money to go from one account to another.

What Is Immediate Payment Service (IMPS)?

IMPS or Immediate Payment Service is an electronic funds transfer system for interbank transactions. The service is immediate, and it is available across multiple platforms such as ATMs, SMS, the Internet, Mobile, and others. Users can also transfer funds using the Prepaid Payment Instrument (PPI) issuers under IMPS.

IMPS was introduced in 2010 by the National Payments Corporation of India (NPCI). Before the launch, individuals could only use RTGS and NEFT since there was no other service available during banking hours. However, with IMPS, users can transfer money immediately, even on holidays. Once the transaction is initiated, the funds instantly get to the beneficiary’s account.

Difference Between IMPS and NEFT

The differences between NEFT and IMPS can be outlined in four areas, which we have highlighted below.

Transaction Timing

Both payment services are available 24/7. However, they differ in how transactions are processed. IMPS and NEFT are two different systems in terms of the time taken to complete a transfer. NEFT transactions are now settled 24x7 in half-hourly batches. NEFT transactions are typically settled within 30 minutes to 2 hours—even on weekends and bank holidays. In contrast, IMPS offers real-time fund transfers, with instant processing that makes it ideal for urgent payments and generally faster than NEFT.

Transaction Charges

As of January 2020, the Reserve Bank of India (RBI) has mandated that NEFT transactions made online by savings account holders must be free of service charges. However, fees may still apply if the transfer is initiated at a bank branch. In contrast, IMPS transactions typically involve nominal charges, which vary by bank and usually range from ₹2.5 to ₹25 plus GST.

Transfer Limit

Although there is no particular minimum transaction amount for both payment services, IMPS transactions have a maximum cap. However, NEFT transactions do not have a maximum limit. Its now applicable for 2024, National Payments Corporation of India (NPCI) has increased maximum limit for IMPS transaction to 500,000₹. However, individual banks may impose their own limits depending on their policies.

Service Availability

IMPS is available across multiple platforms, including internet banking, mobile apps, ATMs, SMS, and USSD services - ensuring flexible access for users. In contrast, NEFT is primarily accessible through internet and mobile banking or by visiting a bank branch, with no support for SMS or USSD channels - making IMPS more versatile, especially for users without constant internet access.

NEFT vs IMPS: Which Is Better for You?

All money transfer services have some particular needs and requirements of each customer and their beneficiaries. The best payment service for you depends on what you are looking for and the purpose of the transaction. For example, if you are responsible for the monetary welfare of your folks residing in another city, and you want to send them money monthly. You can decide to use both IMPS and NEFT.

So, if your parents want money instantly, it is better that you use IMPS funds transfer since it offers a more immediate transaction time. The payment method utilizes an instant transfer facility. However, if you don’t need it to be an immediate transfer, you can go with NEFT. The reason is that you would not have to bear the transaction fees that come with using IMPS.

Aside from that, if you are looking to make offline transactions that you do not want to pay an extra fee, you should certainly go with NEFT. It is available for both online and offline transactions. All in all, whatever payment service you want to use is based on your preference because they both offer good services and they will get the job done for you.