NEFT Vs RTGS Vs IMPS: What’s the Difference?
The way we transfer money has changed a lot in the past decade.
Nowadays, people tend to send money online. This is through transfer services provided by banks or third-party service providers.
When it comes to domestic transfers in India, there are three different types of transfer that are important to know - NEFT, RTGS and IMPS.
Each of these different types operates with different types of settlements, timings and limits. But what is NEFT, RTGS and IMPS? And what is the difference between the three transfers?
We’ll take a closer look at which transfer service may be right for you.
Here’s What We’ll Cover:
What’s the Difference?
NEFT stands for National Electronic Funds Transfer. Its main use is to enable individuals or businesses to transfer money through internet banking.
NEFT allows you to do one-to-one online transactions between different banks. So even if you are both associated with different banks, you can still transfer the money directly to their bank account by using NEFT.
However, for this to work both banks have to be NEFT-enabled. These payments can also only be transferred during the business day, which is typically 8am - 7pm.
There is no limit to money transfers with NEFT. The exception is if you are doing an in-person cash-based transfer. Then the maximum limit in India is ₹50,000.
There are no charges to receive money via NEFT, and there is currently talk to take away any charges with sending money.
All transfers are done in batches on a 30-minute basis. So that means that all transfer requests received within half an hour will be processed and sent together. This money then takes up to two hours to appear in the payee’s account.
There is no limit to how often you can use the service so it is often used for sending money to friends and family or paying bills and rent.
RTGS stands for Real-Time Gross Settlement.
RTGS works on a real-time basis and tends to be used by business owners to transfer large amounts of money instantly. These transfers are not done in batches like NEFT, but done on a one-by-one basis.
RTGS is a safe and secure way to transfer money. The downside of RTGS is that payments only go through during banking hours. So if it’s the evening of the weekend you will have to wait to send or receive money until the bank reopens.
The fees associated with RTGS are not governed by the Reserve Bank of India. This means that an individual bank branch can freely decide their own transaction charges for the service.
In terms of the sum of money sent, there is a minimum limit of ₹200,000 and no upper limit. This means that using RTGS tends to be limited to large purchases or large business transactions.
Once the transfer has been processed, the payee will receive the money immediately, or within 25 minutes.
IMPS stands for Immediate Payment Service.
It is a real-time online payment transfer service that allows transfers from your bank. This is by using either your banking app, a mobile payment, an ATM or at your local branch.
Similar to NEFT, your bank will have to be a participating member of IMPS.
While NEFT and RTGS can only be processed during banking hours, IMPS can be processed at any time. This means that you can do real-time fund transfers and the money will be debited from your bank account and credited to the payee instantly.
By performing an IMPS transfer, you can get immediate transfers at any time of the year. It works on bank holidays, weekends or even late at night.
Similar to RTGS, charges for using IMPS are dependent on the bank branch you are using. But there have been some banks, such as the State Bank of India, that have waived the transaction fees for this service.
The banks also decide what the minimum and maximum transfer limits are. But typically the limits are ₹1 and ₹200,000.
Each of the transfer methods has unique advantages and disadvantages.
If you were looking to send high-value transactions quickly and securely, then RTGS would be the way to go. But if you were looking to instantly send money to family and friends then you may want to use IMPS or NEFT.
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