Difference Between NEFT, RTGS & IMPS

Today, with the advent of different mediums for transferring funds, like NEFT, IMPS and RTGS, making payments has become much easier than ever before. These online payment methods have also brought about a radical shift from cash-based transactions to online payments.

 

While all the three payments methods allow you transfer funds electronically from your bank account to other’s bank account, they have many differences, in terms of transaction speed, associated charges, transfer limits, etc. If you are not well-versed with these money transfer mediums, then this guide will help you understand the difference between these online payment methods.

 

NEFT

NEFT stands for National Electronics Fund Transfer. It allows you to transfer funds electronically from one bank account to another. This money transfer service is available 24/7. All banks in India offer the NEFT service to their customers, allowing them to conveniently transfer funds using their smartphones.

 

It is a centralised payment system operated by the RBI (Reserve Bank of India). Individuals and business entities most often use it as a payment option.

 

Features of NEFT

 

• You can transfer any amount of money via NEFT. There is no limit.
• NEFT transactions may incur a nominal fee, which may vary from ₹2.5 to ₹25, based on the amount you transfer.
• As per the RBI (Reserve Bank of India) guidelines, the funds you transfer through NEFT are processed in batches of 30 minutes. That means there may be a delay in transferring the funds from the sender to the recipient.
• Since 2019, NEFT service has been made available 24/7 for all users.
• To transfer the funds, you would have to log into your Internet banking portal, choose NEFT transfer, add the beneficiary details (receiver name, bank account number, IFSC code, bank branch, etc.), wait till the beneficiary details are verified and approved and initiate the fund transfer. The waiting is needed only if you are transferring the funds to the recipient for the first time. You can initiate the fund transfer immediately if the beneficiary details have already been added and verified.

 

RTGS

RTGS is the acronym for Real-time Gross Settlement. It is an interbank fund transfer system operated by the Reserve Bank of India. It allows both the individuals and business entities to make high-value fund transfer transactions, allowing immediate settlements.

 

As the RBI manages the RTGS system, you can be assured that all your transactions are safe and secure. RTGS operates on a one-to-one basis. As the name says, every transaction you make is settled in real-time. If you are wondering RTGS or NEFT which is faster, RTGS is a clear winner.

 

Since the start of 2019, RBI has waived the processing charges for RTGS transactions, making it the go-to fund transfer system for many. However, the bank can waive the charges at its discretion.

 

RBI has mandated that banks follow a specific charge framework, including a cap of ₹25 to ₹50 on outward transactions. You can initiate an RTGS transfer through internet banking or offline by visiting the bank branch.

 

Features of RTGS

 

• It allows you to transfer a large amount and the service is available round the clock, allowing business entities and individuals to transfer funds in a single transaction without delay.
• Since funds are transferred through RTGS online, there is minimal risk of forgery or payment delays due to misplacement or loss of cheques.
• If you are a business owner, RTGS allows you to manage your business capital more efficiently, as you can transfer and receive funds in real-time.

 

IMPS

 - Immediate Mobile Payment Services

 

IMPS is an instant interbank electronic fund transfer service that allows you to send or receive money instantly. However, if you do RTGS vs IMPS comparison, you would know that the latter has a fund transfer limit of ₹5 Lakh per day.

 

IMPS also has transaction charges, which can range from ₹5 to ₹15, depending on the bank's terms and conditions. Sometimes, you may also have to incur an additional service tax for IMPS transactions. Like RTGS and NEFT, IMPS service is also available 24/7, making it a convenient and efficient fund transfer system for all.

 

Features of IMPS

 

• If you have no prior experience with online fund transfer system and unsure about IMPS or NEFT which is faster, then it is better to choose IMPS. It allows you to transfer and receive funds in real-time and is a secure transfer method.
• IMPS enables you to transfer funds without entering the beneficiary's account number using the receiver's mobile number and MMID (Mobile Money Identifier).
• You can transfer funds through IMPS through the Internet banking portal or the mobile banking application.
• If you are the beneficiary of an IMPS transaction, the amount will be credited to your account within a few seconds.
• The service is available 24/7 and even on bank holidays.
• IMPS money transfer service is available for NRI (Non-Resident Indians) customers, allowing them to transfer funds from their NRI account to a resident Indian's account.

 

NEFT, RTGS, IMPS – which is better? How do you choose the right one?

 

While comparing NEFT, RTGS and IMPS for your fund transfer needs and choosing the right one, here are a few important factors you must consider:

 

• Transaction speed

  The transaction speeds of NEFT, RTGS, and IMPS are different. In NEFT, the funds are processed in batches, which can take a few hours to complete. In RTGS, the transactions are processed individually and usually completed within a few minutes. In IMPS, the funds are transferred in real-time. So, you can choose the transfer method based on how urgently you want to transfer.

   

• Fees

  While choosing the right fund transfer method between NEFT, RTGS and IMPS, you must take into account the charges involved. NEFT transactions only have a nominal fee, and the charges vary based on the amount you transfer. As compared to NEFT, RTGS transactions have higher charges because of the faster processing time. IMPS charges may vary based on the bank offering the service.

   

• Network compatibility

  All banks in India offer NEFT and accept NEFT payments. RTGS service is usually available only for high-value transactions, and it requires both the sender and the receiver's bank to join the RTGS network. You can access IMPS service through different platforms, such as internet banking, ATMs, and mobile applications.

   

Conclusion

All three money transfer methods—NEFT, RTGS, and IMPS—have unique features and advantages. Assess your needs and choose the best method accordingly.