Difference Between IMPS and NEFT

Difference Between IMPS and NEFT

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Rashmi
Rashmi Karan
Manager - Content
Updated on Feb 26, 2024 10:31 IST

Choosing between IMPS and NEFT depends on the nature and urgency of the transaction. IMPS is preferred for quick, small-value transactions, while NEFT is more suitable for larger transfers where cost-efficiency is a priority In this blog, you will learn about the major differences between the most popular digital payment platforms, IMPS and NEFT.

IMPS vs NEFT

Transferring funds has been much easier with the advent of many payment systems in India. Unlike earlier, you can immediately transfer money from one bank account to another. IMPS and NEFT are among the most popular fund transfer options. The main difference between IMPS and NEFT is that IMPS allows money transfers from one bank account to another in real time, while NEFT allows the direct transfer of funds via electronic devices from one bank branch to another.

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What is IMPS?

IMPS stands for Interbank Mobile Payment System. This system lets you transfer funds electronically from one account to another using mobile devices. You can also use other channels such as Internet banking and ATMs. Services are available 24 hours a day, including holidays and Sundays. The account’s beneficiary receives the credit immediately when a funds transfer request is made through mobile phones or Internet banking.

The Indian government introduced IMPS in 2010. Many banks have become part of the system over the years. When sending money through IMPS, sign up for mobile banking. However, most banks register their customers for mobile banking when opening their accounts. When money is received through IMPS, you will receive a message that the money has been credited to your account.

To learn more about banking, read or blog - What is Banking?

How is it used?

  • Connect to bank
  • Click Send Money/Fund Transfer – IMPS – mobile number and MMID
  • Add the beneficiary, if not already added
  • Select debit and credit account
  • Enter the desired amount to transfer and click send
  • Click Confirm
  • Approve the transaction using the OTP you will receive on your mobile phone.

Advantages of IMPS

  • The money is immediately credited to the beneficiary’s account.
  • The service is available 24 hours a day, including holidays and weekends.
  • There is no minimum amount limit for the transfer of funds.
  • Interbank and interbank payments can be made.

What is NEFT?

NEFT, short for National Electronic Funds Transfer, is a service that allows customers to transfer funds from one NEFT-enabled account to another. It was started in 2005, and the Reserve Bank of India maintains it. It is done through electronic messages, but funds transfers do not occur in real time. On weekdays, you can make transfers between 8:00 a.m. and 7:30 p.m. On Sundays and public holidays, you cannot make any transfers.

The platform has gained popularity due to its ease of use. Below is the working process.

  • The customer fills out an application form that details the beneficiary.
  • The client authorizes the bank to debit his account and remit the amount to the beneficiary.
  • The bank sends the message to its aggregation centre (NEFT service centre). The aggregation centre sends the message to its clearing house for inclusion in the available batch.
  • The clearinghouse classifies the fund transfer, and the remittance messages are sent to the destination banks.
  • Once the destination banks receive the messages from the clearinghouses, they credit them to the beneficiary’s account.

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Advantages of NEFT:

  • The method is safe and effective, with fewer chances of errors.
  • Low costs – Transferring money using this method is cheaper.
  • High reliability – The Reserve Bank of India mainly coordinates the NEFT process. Therefore, this method is highly reliable.
  • Eliminates delay – This process is fast and has helped to eliminate the delays associated with the movement of funds. Important transactions are settled within one day from the start of trading. This ensures that clients receive their funds on time.

Comparative Analysis – NEFT vs IMPS

  NEFT IMPS
Definition Transactions are processed and settled in batches, usually at the end of the day or at specified intervals. Transactions are processed and settled in batches, usually at the end of the day.
Money transfer time 48 hours Instant 
Charges Up to Rs. 1 lakh – free
Rs. 1 – 2 lakh – Rs. 15
Above Rs. 2 lakh – Rs. 25
There are no charges for sending or receiving funds using IMPS.
Limits  There is usually no minimum limit.No maximum limit on corporate Internet banking.
Maximum limit of Rs 5 lakhs on retail internet marketing.
Subjected to a daily limit of Rs. 50,000/- per customer with a global calendar month limit of Rs. 2,50,000.00 overall via mobile.
Banks without end-to-end encryption can facilitate transactions up to Rs. 1000/- with a global monthly limit of Rs. 5000/-.
Failed transactions Funds will be returned immediately for failed transactions. It can take a few hours. Funds will be returned immediately for failed transactions.
Category Electronic banking Mobile banking
Time Bank Business Hours Anytime
Vacation Restrictions Yes  No 

Summary of IMPS vs. NEFT

  • Thanks to the technology revolution, individuals can now electronically transfer funds from their accounts.
  • IMPS and NEFT transfer funds from one bank account to another using electronic devices such as mobile phones and tablets. This has eliminated the need to queue in bank rooms for transactions.
  • Individuals can choose the platform that suits them best since the transfer of funds is instantaneous in the case of IMPS and only takes two hours in the case of NEFT.
  • There should be no doubts about the security of the services because they are highly secure.
  • Both systems have pros and cons, and it is difficult to determine which is preferred easily because they are all efficient.

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FAQs

How long does it take for a transaction to be processed in IMPS?

IMPS transactions are processed instantly, and the funds are transferred to the recipient's account in real-time.

How long does it take for a transaction to be processed in NEFT?

NEFT transactions are processed in hourly batches, and it may take up to a few hours for the funds to be credited to the recipient's account, depending on the batch timing.

Are there any limitations on the amount that can be transferred using IMPS?

IMPS allows both small and large-value transactions. Individual banks typically set the maximum limit for IMPS transactions.

Are there any limitations on the amount that can be transferred using NEFT?

NEFT also allows both small and large-value transactions. There is no upper limit on the amount that can be transferred through NEFT.

Is there any specific timing for IMPS transactions?

IMPS operates 24/7, including weekends and holidays, allowing users to transfer funds anytime.

Is there any specific timing for NEFT transactions?

NEFT transactions are available during working hours on weekdays and Saturdays. NEFT is not available on Sundays and bank holidays.

Can IMPS and NEFT be used for international transfers?

No, both IMPS and NEFT are designed for domestic transfers within India. They cannot be used for international fund transfers.

Are there any transaction charges associated with IMPS and NEFT?

The transaction charges for IMPS and NEFT may vary from bank to bank. Some banks may offer IMPS and NEFT transactions free of cost, while others may charge nominal fees based on the transaction amount.

About the Author
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Rashmi Karan
Manager - Content

Rashmi is a postgraduate in Biotechnology with a flair for research-oriented work and has an experience of over 13 years in content creation and social media handling. She has a diversified writing portfolio and aim... Read Full Bio