IMPS vs NEFT in Banking
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, IMPS and NEFT have many discrepancies.
What Is 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 money transfer 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 real-time. It takes some time for the money to go from one account to another.
What Is IMPS?
IMPS or Immediate Payment Service is an electronic funds transfer system for interbank money transfers. The service is real-time, 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 created by NPCI (National Payments Corporation of India) in 2010. 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 and in real-time, even on holidays. Once the transaction is initiated, the funds instantly get to the beneficiary’s account.
Difference Between IMPS vs NEFT
The differences between IMPS and NEFT can be outlined in four areas, which we have highlighted below.
Both payment services are available 24/7. However, both of them have different ways of processing transactions. NEFT vs IMPS are different in terms of the time taken to complete a transfer. Unlike IMPS, NEFT is not a real-time payment service. The transaction does not get processed instantly. It goes through cut-off timings and batches of each bank, which can take up to two hours to be completed. But IMPS is a real-time payment service where transactions are processed instantly.
Typically, NEFT transactions do not require charges for money transfers once it is done online. But, the fees may apply if the transfer is started at the bank’s branch. On the other hand, IMPS transactions come with fees, and the bank determines the rate per transaction. However, it is usually low between INR 2.5 to INR 25+GST.
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. The maximum limit for each IMPS transaction is INR 200,000.
Another major difference between IMPS and NEFT is that IMPS is only available online. However, the NEFT payment service is available online and offline.
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.