What’s the Difference between NEFT, RTGS and IMPS
Over the past few years, there has been a great change in the banking systems. The way we can transfer money has changed completely after the introduction of the NEFT, RTGS and IMPS. With the introduction of new services, the process of transferring money has become very simple. The different settlement systems can transfer money from one bank account to another within a few minutes. This aids various businesses, customers and banks in faster payments and reducing workload. It also reduces a gap among the customers, entities, companies and other respective people and organizations. These methods are convenient, useful and fast.
Let’s check out these processes and the difference between them:-
Multiple ways for transferring money via online mode
As mentioned earlier, one could easily transfer funds through these online processes in India. Below mentioned are some of the popular methods which are used by most of the organization’s, government bodies, and the masses are:-
- NEFT or National Electronic Funds Transfer
- RTGS or Real-Time Gross Settlement
- IMPS or Immediate Mobile Payment Service
While NEFT and RTGS payment processes have been initiated by the RBI or Reserve Bank of India, IMPS was started by the National Payments Corporation of India or NPCI. Before knowing more about these payment systems and the difference between them we should first look at a few important things related to online money transfer.
Essential terms related to online money transfer
1. Service Availability – Most of these systems have specific timings while some are available 24/7. Those services which are available 24/7 allows its users to transfer money at any time and any day. But one must note that the fund would settle only when the service is active.
2. Fund Transfer Charges – This is the amount that is charged by any bank for the transfer of funds, speed of transfer and other similar features availed by the user. These charges for the payment transfer are decided by the banks individually as per the RBI norms. Transferring funds may or may not involve charges.
3. Fund Settlement Speed – It is the total time which is consumed by a process after being initiated by a person for transferring money from one account to another. All the fund transfer systems have different speeds of funds settlement.
4. Fund Transfer Limit – This is the minimum and maximum amount of the money which can be transferred. It differs from one payment system to another. It also acts as an essential factor for finding out which money transfer system is more suitable for an entity, person and an organization.
Different payment systems
National Electronic Funds Transfer or NEFT
NEFT allows a person to transfer funds online from one banking account to another banking account which may be in a different bank or the same bank. These transfers occur in batches after every 30 minutes so it doesn’t occur in real-time. But it doesn’t mean that your money is transferred after 30 minutes, it can take longer than that. The minimum transaction can be of Re 1 while the maximum amount can vary from bank to bank. For example, an X bank may allow upto Rs 5 lakhs per day while the Y bank can allow Rs 10 lakhs per day.
If a person is transferring funds using a bank’s mobile app or through net banking via the NEFT process, one may not attract any extra charges. But, if one decides to go to the bank for doing an NEFT transfer, some transfer charges are charged.
For example, ABC bank may charge you around Rs. 2.50 to Rs. 25 excluding the GST, which depends on the funds to be transferred. This settlement of funds is done through an order by order basis using batch systems as RBI allows remittance of the funds in 2 hours. This settlement occurs using the books of RBI via IBTS or InterBank Transfer Scheme which makes any such transaction irrevocable and final. Then, the RBI reports the transfer of money to the remitting bank which reports to the remitter.
Features of NEFT
- If the NEFT transaction is done in non-banking hours which is above Rs 10 lakhs it would be credited on the next bank working day.
- Rs 1 is the minimum transfer amount
- Rs 20,00,000 is the maximum transfer amount
- One can transfer money through NEFT either using online mode such as internet banking or personally visit the bank branch
- Transfer of NEFT funds is free of cost when done online
- This service can be availed only if the receiving bank has the NEFT option enabled
How to transfer money using NEFT?
- Step 1: Login using the bank’s official net-banking site using the username and password assigned. Go to the NEFT transfer section.
- Step2: Click on ‘Add’ button and input the account number of the beneficiary, the name of the beneficiary name, their bank branch address can be added through IFSC and the amount to be transferred in the fields. Select the beneficiary account from the list of different banks. If you don’t know the IFSC code you can use the location option to locate the branch of the beneficiary through the drop-down menu.
- Step 3: Select the‘ Accept Terms and Conditions’ button then click on the ‘confirm’ button.
- Step 4: Choose the type of transaction.
- Step 5: If you are sending the money to a payee in a different bank account through NEFT choose the ‘Inter-Bank Transfer’ link.
- Step 6: An OTP would be sent immediately to the registering mobile number. Enter the OTP for validating the transaction. If OTP is not showing up, you can resent the OTP by clicking the ‘resend OTP’ option.
After entering the OTP, the transaction is completed. This is the basic outline of the steps involved in NEFT transfer, it can vary from bank to bank.
Real-Time Gross Settlement or RTGS
RTGS process allows a person to credit the money to another person’s account in real-time, that is, instantly. This payment settlement system allows a person to settle large amounts of money which require instant clearing or settlement. This method is very popular in businesses, corporates as it transfers the money at that time.
The minimum amount which requires transferring using RTGS is Rs. 2 lakhs while there is a maximum limit that differs from bank to bank. But, there’s no cap on the upper limit as per the norms of the Reserve Bank of India or RBI. For instance, an XYZ bank can have Rs 10 lakh as the maximum transfer limit daily and for ABC Bank it can be Rs. 20 lakhs per day.
Similar to the NEFT process, for using the RTGS transfer online process, there is no extra charge deducted but for transferring money through RTGS via visiting a bank branch, a fee is charged by the bank.
Features of RTGS
- RTGS offers a real-time settlement using an order by order basis, that is, RBI remittances the order in half an hour of transfer.
- This settlement occurs using the books of RBI via IBTS or InterBank Transfer Scheme which makes any such transaction irrevocable and final. Then, the RBI reports the transfer of money to the remitting bank which reports to the remitter.
- RTGS service can be availed 24*7, around the year, also on Sundays as well as bank holidays.
- If the RTGS transaction is done in non-banking hours which is above Rs 10 lakhs it would be credited on the next bank working day.
- Rs 2,00,000 is the minimum transfer amount
- Rs 20,00,000 is the maximum transfer amount may change depending on banks
- One can transfer money through RTGS either using online mode such as internet banking or personally visit the bank branch
- Transfer of RTGS funds is free of cost when done online
- This service can be availed only if the receiving bank has RTGS option enabled
How to transfer money using RTGS?
For transferring money using RTGS, one must first add a beneficiary then you can do a funds transfer.
Below mentioned are the steps to add beneficiary for RTGS:-
- Step 1: Login using the bank’s official net-banking site using the username and password assigned.
- Step 2: Select the Funds Transfer tab from the menu.
- Step 3: Click on “Add a beneficiary” then choose “Find Beneficiary Type” for selecting “Transfer to Other Bank”.
- Step 4: Input all the account details of the beneficiary which also includes their name, account number, IFSC code, and bank name.
- Step 5: Choose on the add & confirm option.
A confirmation message appears that you have successfully added the beneficiary.
After adding the beneficiary, you can easily transfer through RTGS using the process mentioned below:-
- Step 1: Login using the bank’s official net-banking site using the username and password assigned. Select the Funds Transfer tab from the menu.
- Step-2: Choose the RTGS option and add the payee or the beneficiary you want to transfer the funds to.
- Step 3: Enter the amount of money that needs to be transferred.
- Step 4: Check all the required details and confirm. The funds will get transferred in 30 minutes.
Immediate Mobile Payment Services or IMPS
If you use NEFT and RTGS for money transfers it may take some time. On the other hand, IMPS is a very quick real-time inter-bank funds transfer system that is managed by the National Payment Corporation of India and it is available round the clock 365 days a year including bank holidays. Furthermore, this system offers a real-time fund transfer facility on banks’ online channels such as mobile banking, net banking, via SMS and through ATMs.
The fund transfer from say, your account to your supplier’s account through IMPS is done in a fraction of a second. All you need to do is to input the account number along with the IFSC code of the beneficiary in order to complete the transaction.
The minimum limit for transactions through IMPS fund transfers is one rupee whereas the maximum amount is capped to Rs. two lakhs. That is the reason why retail customers across India prefer this fund transfer method over other systems even for a small-value transaction.
There are charges for transactions through IMPS. It varies from bank to bank.
Features of IMPS
- Rs 1 is the minimum transfer amount
- Rs 20,00,000 is the maximum transfer amount with Rs 2 lakh per transfer
- One can transfer money through IMPS only through online mode such as internet banking
- One gets instant confirmation of the fund’s transfer
- This service can be availed only if the receiving bank is a member of NPCI
- Settlements occur 24/7 at that instant just like UPI transactions
- Whenever an IMPS transaction is done, be it in banking or non-banking hours whatever may be the amount it gets transferred immediately
- Window of IMPS is open always
How to transfer money using IMPS?
If you want to transfer your money using IMPS on your mobile banking platform, you need to follow the below steps.
First, you have to log into the mobile banking application of your bank.
If you have to send money then you have to click the Send Money/Fund Transfer tab and then go to the IMPS option.
- Step 1: Then you are required to enter the beneficiary’s mobile number, the amount to be transferred and the beneficiary’s MMID, i.e., Mobile Money Identifier.
- Step 2: The application will require your Mobile PIN (MPIN) which you have to input at this point to validate the transfer.
- Step 3: Once you give your Mobile PIN (MPIN), the amount of money you have written will be sent to the intended beneficiary.
- Step 4: After this step, the bank shall send you a confirmation text message that mentions transaction no. You may use this transaction number for queries and complaints and also while giving feedback.
If your client wants to send you money through IMPS you have to provide him your name (as per bank records), your mobile no. and your MMID to the payer and then he/she shall be able to send you the funds.
- Step 1: If you want to transfer money through IMPS on the online banking/Net-banking platform, then you have to follow the below steps-
- Step 2: First, log into your bank’s portal of net-banking/online banking.
- Step 3: If you want to send money then –
- You are required to add an IMPS beneficiary by inputting the beneficiary’s account no., account type along with his IFSC Code, his name as specified in bank and branch name and address.
- After your bank sends you a confirmation that the proposed beneficiary has been included, you need to go to Fund Transfer.
- Then you need to select the particular beneficiary to whom you want to transfer funds after which his details will appear on the screen.
- Then you need to enter the amount and remarks if necessary
- At this point you have to confirm the transfer to complete the transaction and your payment will be settled.
You will then get a transaction reference no. which you are required to keep for any query or feedback.
Difference between RTGS, IMPS and NEFT
Here are the basic differences between NEFT, RTGS AND IMPS which is explained in the form of a table below.
Online as well as offline
Maximum amount for transferring money
No charge for online process or inward transaction
For outward transactions:-
Rs 2 lakhs to Rs 5 lakhs – Upto Rs 25 plus GST
Rs 5 lakh and above – Upto Rs 50 plus GST
Available all round the year 24/7
Available all round the year 24/7
Benefits and advantages of transferring money online
Here some of the benefits and advantages of transferring money online:-
- It is convenient, fast and reliable
- You don’t have to visit the branch personally and wait in the queues. It can be done at anytime
- There is no cost for transferring money online through NEFT, RTGS and IMPS
- You get flexibility and choice – like the number of funds to be transferred, speed of transaction, timing and cost which you can select as per your needs
Which method will work best for you?
This depends on the reason for transferring money and the need for transferring it. For example, if you want to transfer money immediately for any emergency or financial needs, then IMPS is best suited as you can transfer money instantly. For transferring money in small amounts then NEFT is best but it takes some time to reach the person concerned. RTGS is useful only when you are making business transactions of higher amounts or sending it to someone for any property or asset deals.
Difference between RTGS, IMPS and NEFT FAQs:
1. Is GST applicable on the NEFT or RTGS transaction?
2. Can one do an IMPS transfer by visiting a bank branch?
3. What is the limit of cash transfer done through NEFT?
4. Which payment mode is faster NEFT or RTGS?
5. Are Fintech companies allowed to do NEFT transfers?
6. How much time does it take for beneficiary addition for RTGS?
7. Can NRIs do IMPS transactions?
8. In IMPS, NEFT, and RTGS which has the fastest transaction process?
9. RTGS is said to transfer funds in real time but why is it said that it might take 30 minutes to transfer the funds?
10. How much time does NEFT take for transferring funds?
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