NEFT vs IMPS: What’s the Difference?
When it comes to electronic fund transfers in India, two primary systems stand out: National Electronic Funds Transfer (NEFT) and Immediate Payment Service (IMPS). Both these systems facilitate the transfer of funds within minutes, but they have distinct features and use cases. This article will provide a comprehensive overview of NEFT and IMPS, highlighting their differences and helping you choose the right system for your financial transactions.
1. Speed of Transfer
NEFT: Transactions through NEFT are conducted in batches, with settling times occurring at hourly intervals. Therefore, these transfers are not instantaneous and might take several hours to complete, especially if executed outside of regular banking hours.
IMPS: This system allows for real-time transactions round the clock, 24/7. This instant transfer capability makes it an ideal choice for urgent and immediate financial transactions.
2. Operating Hours
NEFT: Traditionally, NEFT transactions were restricted to specific banking hours and days. However, as of December 2019, NEFT has been expanded to be available 24/7, including weekends and holidays. Despite the extension, there can still be reduced activity during non-banking timings.
IMPS: Available 24/7, including weekends and holidays, IMPS ensures that transactions can be made at any time, offering maximum flexibility and convenience.
3. Transaction Limits
NEFT: There is currently no upper limit on the amount that can be transferred via NEFT, although individual banks may have their own set limitations.
IMPS: Generally, IMPS has a lower per-transaction limit compared to NEFT. These limits vary by bank and are typically set at Rs. 2 lakh per transaction. However, some banks may offer higher limits for their customers.
4. Charges
NEFT: Charges for NEFT transactions are usually lower, and many banks offer these transactions for free to their customers, especially for basic transfers.
IMPS: Charges may be slightly higher compared to NEFT. Banks may apply fees based on the transaction amount and the customer's account type. These charges can vary significantly between different banks.
5. Use Cases
NEFT: Suitable for bulk payments, scheduled payments, and transactions where immediate transfer is not critical. It is commonly used for business transactions and periodic payments.
IMPS: Ideal for urgent small-to-medium payments where immediate transfer is necessary. IMPS is often used for person-to-person transactions, bill payments, and other scenarios where speed is crucial.
6. Transaction Reversal and Disputes
NEFT: Due to its batch processing nature, the process for reversing or resolving disputes can be slower compared to IMPS. This can be a potential drawback for those who need quick resolution of any issues.
IMPS: Given that transactions are processed in real-time, the handling of reversals or disputes can be quicker, making it a more suitable choice for urgent transactions.
7. Authentication
NEFT: Requires the use of secure banking platforms like internet banking or mobile banking apps and may involve additional authentication steps. This can add a layer of security but may be less convenient for users who prefer simplicity.
IMPS: Uses mobile numbers and MPINs (Mobile Personal Identification Numbers) for transactions, making it more accessible via mobile platforms. This approach simplifies the authentication process and aligns with the growing preference for mobile communication.
8. Settlement Process
NEFT: Operates on a batch processing model, with settlement occurring at specific intervals. This means that the transaction is not settled immediately, leading to potential delays.
IMPS: Operates on a real-time settlement model, meaning that transactions are processed and settled instantly, providing immediate confirmation of the transfer.
In summary, NEFT and IMPS serve different needs based on the speed and volume of transactions. NEFT is better suited for non-urgent, batch-processing transactions, while IMPS is ideal for immediate real-time transfers.