There are several ways available for making fund transfers, including NEFT (National Electronic Funds Transfer), IMPS (Immediate Payment Service) and RTGS (Real Time Gross Settlement), but each has its own unique features and advantages. So far, the major advantage IMPS had over NEFT was that the former is available 24×7, whereas the latter was only available from 8am to 7pm on working days, except the second and fourth Saturdays of the month and other bank holidays.
NEFT transactions were settled in half-hourly batches through 23 settlements, whereas IMPS takes place in real time, which meant that transfers happen immediately. But the Reserve Bank of India (RBI) has recently levelled the playing field by announcing that NEFT has become a 24×7 facility that will be available even on bank holidays.
Now that NEFT and IMPS are both available round-the-clock, we tell you what differences remain between the two and which will serve your needs better.
Transfer large amounts immediately
IMPS is designed to be used for transferring small amounts. The service caps fund transfers at ₹2 lakh, but there is no lower limit on transactions amounts. By contrast, NEFT has no upper limit to the transaction amount. This means that you can now transfer large amounts round-the-clock through NEFT.
“This will be extremely beneficial for large-value transactions which cannot be done through UPI or IMPS, said Mandar Agashe, founder and vice chairman, Sarvatra Technologies.
IMPS still chargeable
Another differentiator that works as an advantage for NEFT has resulted from a major change RBI announced after its July monetary policy review—that processing charges levied for NEFT and RTGS transactions will not apply starting January 2020. IMPS, on the other hand, is still chargeable. While the charge levied on an IMPS transaction depends largely on the amount being transferred and the policy of the bank carrying out the transfer, the fees usually range from ₹1 to ₹25.
Before RBI announced the waiver, NEFT transactions also incurred similar charges. For instance, the charges for NEFT transfers through SBI would cost between ₹2.5 and ₹25 for transactions between ₹10,000 ans ₹2 lakh. “To further boost digital transactions, RBI must consider a similar waiver of charges for IMPS,” said Raj Khosla, founder and managing director, MyMoneyMantra.com.
No bank details needed
One major advantage that IMPS offers is that you don’t need to go through the process of entering the payee’s bank details every time you want to transfer money. The service is designed for mobile users and you can simply use a payee’s MMID (Mobile Money Identifier) to make transfers.
MMID is a unique 7-digit unique number issued by the bank upon registration, and can be used to make transfers using the registered mobile number. NEFT, on the other hand, requires you to add the beneficiary through internet banking if you want to make a transfer. This means you need to enter all their details including bank account number and IFS code of the branch.
Both NEFT and IMPS offer different advantages, and which one will work better depends on the kind of transaction you intend to make. If you have to make a transfer quickly and don’t want to go through the hassle of registering a beneficiary, opt for IMPS. On the other hand, if you want to transfer a large amount, NEFT is the better choice.