There are many ways to make bank-to-bank payments, but all of them depend on the time and the amount you want to transfer to another account. Mobile or internet banking, visiting a bank branch, depositing a cheque, there are many ways in which one can make transactions.
Among distinguished modes of payments and the boom of digital money transfer- commonly known as UPI, also got popularity in daily payments and transactions from one bank to another.
However, IMPS and NEFT are some of the most widely known and used transactional methods that the common masses prefer. Let us know the details about the same.
What is an NEFT
NEFT- also known as National Electronic Funds Transfer, is an electronic funds transfer method of the Indian banking system; these services are available 24*7 and are operated by the Reserve Bank of India. However, the payee can send money to another account in batches.
What is an IMPS
Immediate Payment Services, also known as IMPS, is another method of electronic funds transfers from a payee to a receiver account - a nationwide funds transfer system maintained by the National Payments Corporation of India. The service is also available for funds transfer 24*7, like NEFT. However, we must know that these details are subject to changes in guidelines made by the Reserve bank of India.
Difference between NEFT & IMPS
Though both are electronic funds transfer systems and work 24*7, there are some differences that one must keep in mind before initiating the transactions. Both of these methods are safe and involve negligible risk of fraud, both falling under the purview of the Reserve Bank of India. There are some fundamental differences between IMPS and NEFT that are as follows-
Transaction charges
The transactions made by NEFT demand no charges for any funds transfer as long as it is done with the help of online services. On the other hand, if the transaction is initiated at the bank branch of the bank, then the charges may apply. In the case of IMPS vs NEFT, the transactions made in IMPS are chargeable, and the per transaction rate differs from bank to bank as decided. However, it mostly ranges from Rs. 2.5 to Rs. 25.
Timings
Rather than a difference, the timings of both transactions have no difference. Both can be used 24*7 and 365 days. It even works on Sundays and holidays. Also, it works on bank holidays and bank offs as well.
Amount limit
However, there is no set lower cap on the transactional amount of both services, IMPS transactions have a maximum limit, but NEFT does not. The maximum limit as per the IMPS transaction has a set cap of Rs. 20,000, but there is no cap for NEFT when we talk about IMPS vs NEFT.
Must Read: IMPS Meaning in Banking: How to Do it, Timing, Charges & Limits
Which one is faster?
As the name suggests, IMPS transfers the funds instantly into a beneficiary's account. It takes a maximum of half an hour for the amount to be credited to the receiver's account. On the other hand, NEFT works on a batch basis. It makes the payment in batches as it is settled on a one-to-one basis transferring money between enabled banks with the help of electronic messages. It is not a real-time money transfer platform like its counterpart, IMPS.
When to use IMPS and NEFT?
Every type of money transfer satisfies some distinct wants and demands of the payee and their recipients. Your needs and the goal of the transfer will ultimately determine which payment method is ideal for you. Let's imagine, for illustration purposes, that you are in charge of paying your parents' rent in a distant city. You want to provide them with monthly payments. NEFT and IMPS are both available. Due to the quick transfer capability, you can now use the IMPS fund transfer technique if your parents require money immediately. You can use the NEFT fund transfer method if they can wait for the transfer of funds, and you do not want to pay the transaction fees associated with IMPS.
For NEFT
If you have any type of savings account like a 0 balance account, you can make NEFT transfers by logging in to the bank’s net-banking portal. Next, you must add an NEFT beneficiary by entering the beneficiary's account number, account type, IFSC code, name, and contact information. Finally, after your bank verifies that the intended beneficiary has been added, you must go to the NEFT Fund Transfer tab. The recipient to whom you want to transfer funds must then be chosen and the beneficiary's account information will appear. The transfer Amount and Remarks (optional) must then be entered. The beneficiary will get your NEFT funds in an hourly batch transfer.
Read More: NEFT Meaning in Banking: How to Do it, Timing, Charges & Limits
For IMPS
You must first log into your bank's net-banking portal to perform an IMPS transfer. Next, you must add an IMPS beneficiary by providing the beneficiary's account number, account type, IFSC code, name, and contact information. Finally, after your bank verifies that the intended beneficiary has been added, you must select the IMPS Fund Transfer tab. The recipient to whom you want to transfer funds must then be chosen. The beneficiary's account information will show up when you do that. The amount and the remarks must then be entered. Once the payment has been verified, the transaction will be finished. Since this is an IMPS transaction, money will be transmitted right away.
Final Words
NEFT and IMPS are both effective payment methods. Although IMPS has a restriction, it can be used for instant transfers. You can use NEFT to send more significant amounts of money. You should also compare the fees you pay for various types of transactions. When it comes to small transactions, IMPS is by far the most widely used traditional method of payment. However, as an online payment method, nothing tops the UPI money transfers. Unlike IMPS and NEFT, UPI transactions with Paytm have no restrictions and may be carried out whenever and from wherever.
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