IMPS vs. UPI: What’s the Difference and Which Is Better?

The term “IMPS” stands for ‘Immediate Payment Service’. It is a secure and immediate interbank electronic fund transfer service that enables users to access their bank accounts and transfer money.

The National Payments Corporation of India launched the UPI (Unified Payments Interface) payment system. Customers can use UPI to pay directly from their bank accounts to various merchants, online and offline, without typing credit card numbers, IFSC codes, or net banking/wallet passwords.

The UPI system, launched by NPCI, has become the backbone of India’s digital payments ecosystem, enabling seamless peer-to-peer and merchant transactions across mobile platforms. Both UPI and IMPS support e-commerce, B2B, and B2C transactions, providing users with real-time payment capabilities for a wide range of use cases.

The question is, what makes UPI better? This question is especially relevant when comparing UPI to Immediate Payment Service (IMPS), which provides similar features and benefits to the UPI app.

Security

In comparison to IMPS, UPI provides a more secure payment transfer method. It is because, unlike IMPS, only a few details are entered when initiating a transaction. However, in the case of IMPS, bank account information is entered, which is risky on an unsecured network. As of 2025, most UPI transactions remain free for retail users. However, certain merchant transactions — especially via prepaid wallets (PPI) — may carry nominal interchange fees, depending on the use case and platform. IMPS charges, meanwhile, vary by bank and apply above specific thresholds.

The UPI app is paving the way to a cashless economy in the coming years. It has numerous benefits and provides the customer with safety and security when transacting compared to IMPS.

What Is the Difference Between UPI and IMPS?

To better understand both fund transfer systems and determine which is superior, let us first define each of them. An MPIN (Mobile PIN) is a 4- or 6-digit code used to authenticate UPI transactions. In contrast, IMPS transactions require OTP (one-time-password) authentication. An OTP is sent to your mobile phone once you verify and authenticate the payment.

To complete an IMPS transaction, you must enter a long and complicated set of information, such as your name, bank account number, IFSC code, and so on — unlike credit card payments online, which typically require less manual input. It is usually inconvenient for users. In comparison, the UPI transaction is an easy process that requires only the payee’s Virtual Payment Address (VPA).

For example, instead of making an IMPS fund transfer to Arun Iyer at XYZ bank, XYZ branch with IFSC code XYZ09865, one can do the same with UPI with just ArunRahal@xxxbank.

When making an IMPS transfer, the account holder must install the app for debiting. On the other hand, UPI provides the flexibility of linking multiple bank accounts from the same app. It decreases the need for storage space when downloading apps from multiple banks, which is useful if you have different bank accounts. While IMPS has traditionally supported limited international remittance corridors, UPI has recently expanded to enable cross-border payments in countries like Singapore and the UAE, thanks to partnerships between NPCI and local payment systems. This makes UPI increasingly competitive for international payments in India.

Hence, for a UPI transaction, everything you require is a Virtual Payment Address (VPA). However, IMPS requires the account holder’s name, bank name, bank branch, the IFSC code, and the user’s account number. Not only that but if a payment is made to a payee for the very first time, they must first be included as a beneficiary. However, this is not the case with UPI. The process of adding beneficiaries to IMPS is time-consuming.

UPI vs. IMPS: Why UPI Offers a Better User Experience

UPI is preferable because, while both IMPS and UPI offer near-instant money transfers, UPI provides a smoother user experience. IMPS transactions often require the user to add a beneficiary and enter detailed account information, which may involve additional steps depending on the bank. In contrast, UPI payments can be made instantly using only a Virtual Payment Address (VPA), without the need for payee registration or activation delays. This makes UPI especially convenient for first-time and peer-to-peer transactions.

UPI also supports collect requests, allowing users to request payments from others with predefined amounts and due dates — a convenient feature for freelancers, small vendors, and shared expense tracking using online merchant accounts. This functionality helps streamline both personal and business transactions. IMPS, on the other hand, does not support payment requests and only allows sending money to registered beneficiaries.

Additionally, UPI enables users to link multiple bank accounts within a single app, eliminating the need to install and manage separate apps for each bank. While most personal UPI transactions remain free, certain commercial payments may involve nominal fees — unlike IMPS, which typically applies charges based on the transaction amount and individual bank policies.

Conclusion: IMPS vs. UPI — Which Should You Use?

While both IMPS and UPI offer real-time payment capabilities, UPI stands out for its simplicity, scalability, and user-friendly features. As digital transactions continue to evolve, UPI is leading the transformation of India’s payment landscape — not just for individuals, but also for businesses of all sizes.