Confused between IMPS, NEFT, and RTGS? Read this article to know how these are different.

· 3 min read

It is more convenient to get anything done online than offline today, including financial transactions. To ensure that money is transferred from one user to another in a safe and secure manner, a nationally regulated electronic fund transfer mechanism is required to provide this service to all users. To that end, the most commonly used electronic fund transfer mechanisms are IMPS, NEFT and RTGS, and in this article, we will discuss the similarities and differences between IMPS vs NEFT vs RTGS.

What are IMPS, NEFT, and RTGS?

‘IMPS’ is the acronym for ‘Immediate Payment Service’, a fund transfer service which is offered by the National Payments Corporation of India (NPCI), under the ownership of the Reserve Bank of India (RBI).

‘NEFT’, on the other hand, is an acronym for ‘National Electronic Fund Transfer’ which is a fund transfer service directly operated by the RBI, as opposed to IMPS.

‘RTGS’ is also an electronic fund transfer system that facilitates immediate funds transfer between two accounts. An acronym for ‘Real-Time Gross Settlement’, the primary utility of RTGS is for high-value transactions.

Similarities between IMPS, NEFT, and RTGS

Before we explore the differences between IMPS vs NEFT, we must understand the similarities these services offer.

- Timings: IMPS, NEFT and RTGS are all available to users 24x7, making it a very convenient system for everyone involved
- Online availability: IMPS, NEFT and RTGS are all available for online transactions
- Operations: All three services are operated either directly or indirectly by the Reserve Bank of India

Differences between IMPS, NEFT, and RTGS

There are a few key factors that differentiate the three transaction mechanisms.

1. Minimum Transferable Amount: IMPS and NEFT require a minimum of ₹1 to be transferred through their mechanism, while RTGS requires a minimum of ₹2,00,000 to be used for transactions.

2. Maximum Transferable Amount: NEFT and RTGS have no set limit from RBI on the maximum transferable amount, and it can vary from bank to bank. On the other hand, IMPS has a set amount of ₹2,00,000 as the maximum transferable amount.

3. Offline availability: While NEFT and RTGS are available for both offline and online modes of payment, IMPS is only available on the online mode.

4. Processing method: The most important difference, NEFT processes and transacts funds in batches, while IMPS transactions are cleared individually. NEFT is not a real-time fund transfer mechanism, while the IMPS is a real-time fund transfer mechanism, transferring the funds instantaneously into the receivers’ account. RTGS  transactions are also real-time and on a gross basis, just like IMPS.

5. Transaction charges: Although charged at the discretion of the individual banks, NEFT charges start from ₹1 per transaction till ₹25 per transaction, while IMPS charges start from ₹5 per transaction till ₹15 per transaction. However, the RBI has since removed the service charges on NEFT transactions initiated via the internet or mobile banking.

No charges are levied on online RTGS transactions, while a charge of ₹15 plus GST is levied if the transaction is carried out at a bank branch.

Another massive difference between IMPS vs NEFT is that you are not required to go enter the receiving party’s bank details every time you are needed to transfer funds using IMPS. It’s much simpler to use the receiving party’s Mobile Money Identifier (MMID),  7-digit unique number issued by the bank upon registration, to make transfers if you are a registered mobile user. On the other hand,  you are required to add the beneficiary from internet banking to make the transfer from NEFT, i.e. manually entering the account number and branch IFSC code every time.

What to choose between IMPS, NEFT, and RTGS?

It depends on what are the important factors regarding your transaction.

1. Urgency: To proceed with an instant transfer, go ahead with IMPS as the NEFT mechanism may take some time to complete the transaction.
2. Transfer Network: You will need to cross-verify whether the receiving party is part of the NEFT, IMPS, or RTGS network since not all banks or branches across India may be part of this network.
3. Transaction charges: You’ll be charged by NEFT, IMPS, or RTGS for your transaction, regardless of which mechanism you choose. However, the rates will vary from bank to bank and it’s in your best interest to cross-check which mechanism costs less in charges.
4. Transaction amount: There are particular limitations on transferable amounts in IMPS and NEFT, while RTGS is designed for the purpose of high-cost transactions. Therefore, the RTGS mechanism is preferable for larger sums, especially above ₹2,00,000.

If the amount is lesser than ₹2,00,000, you’ll have to identify which will be beneficial for you.

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