Why NEFT and IMPS Still Play a Vital Role in the Indian Banking Ecosystem

Unified Payments Interface (UPI) has surged in popularity for its convenience and speed. However, despite its advantages, National Electronic Funds Transfer (NEFT) and Immediate Payment Service (IMPS) continue to hold significant importance in the Indian banking landscape. This article explores the reasons why NEFT and IMPS remain essential payment methods alongside UPI.

Broader Accessibility:

Bank Coverage: NEFT and IMPS are accepted across a broader range of banks in India, including those that do not support UPI. This wide acceptance ensures that users have access to electronic fund transfers regardless of the bank they use. Non-Mobile Users: Some individuals may not have smartphones or access to the internet, making NEFT and IMPS more accessible options for them.

Transaction Limits:

Higher Limits: These payment methods often allow for higher transaction limits compared to UPI, which can be critical for large payments. Individuals or businesses who require transferring substantial amounts of money will find NEFT and IMPS more suitable.

Settlement Timing:

NEFT: Transactions with NEFT are processed in batches and can be scheduled for specific times. This is particularly beneficial for businesses that need to manage their cash flow effectively. IMPS: Immediate Payment Service offers real-time settlement, much like UPI, but can be used for bank-to-bank transfers outside the UPI infrastructure.

Use Cases:

Bulk Transactions: Many businesses prefer NEFT for bulk transactions or salary payments due to its structured nature. Scheduled Payments: NEFT is often used for recurring payments such as loan repayments, utility bills, and subscriptions that need to be made on a regular basis.

Infrastructure and Reliability:

Established Systems: NEFT and IMPS are well-established systems with a long history, which provides users with a sense of trust and reliability. Backup Options: In case of UPI outages or issues, having NEFT and IMPS as alternatives ensures that electronic fund transfers can still occur, providing users with a reliable backup solution.

Integration with Banking Services:

Banking Operations: NEFT and IMPS are integrated into various banking operations and services, including corporate banking and treasury management, making them an integral part of the banking ecosystem. This integration ensures that these payment methods can be seamlessly used in conjunction with other banking activities.

In conclusion, while UPI is indeed faster and simpler for many everyday transactions, NEFT and IMPS continue to play a vital role in the financial ecosystem by catering to different user needs, transaction sizes, and operational requirements. Each payment method has its strengths, and the choice depends on the specific context and needs of the user.