NEFT and IMPS are two types of RTGS systems based on the nature of fund transfer. NEFT and IMPS is an electronic funds transfer system that facilitates person-to-person and bank-to-bank money transfer transactions between different bank accounts in India. IMPS and NEFT are exceptionally similar, yet they are different too.
IMPS vs NEFT
The main difference between IMPS and NEFT is that IMPS (Immediate Payment Service) is a branch of the RTGS system which allows funds transfer with finality between two bank accounts, whereas NEFT (National Electronic Funds Transfer) is a branch of the RTGS that enables real-time funds to transfer between two different bank accounts through an automated teller machine.
IMPS stands for Immediate Payment Service, where IMPS does not require registration. To initiate an IMPS, it requires only a mobile phone number. The mode of authentication for IMPS is the bank’s mobile banking USSD application and IVR (Interactive Voice Response).
NEFT is an electronic funds transfer system through which funds can be transferred from any bank branch to another in the same city and across the country, 24 hours a day. NEFT transfers do not need any banking requirements and have no charges levied per transaction.
Comparison Table Between IMPS and NEFT
| Parameters of Comparison | IMPS | NEFT |
| Definition | IMPS is a facility that enables a customer to transfer funds abroad electronically using the Internet or any mobile phone. | NEFT is a facility that enables a customer to transfer funds from one bank branch to another bank branch. |
| Obtainability | IMPS has the obtainability of any time throughout the year. | NEFT has the obtainability of only during functioning days. |
| Bank Transferability | IMPS transfers are instantaneous, as funds will appear in an account within 30 minutes of receiving a request. | NEFT money will be transferred from the sender’s bank account to the receiver’s bank account within a day or two. |
| Celerity | The celerity of IMPS is high. | The celerity of NEFT is high. |
| Transaction Restriction | IMPS has a transaction restriction of 1 lakh. | NEFT doesn’t have any transaction restrictions. |
What is IMPS?
IMPS stands for Immediate Payment Service. On this service, the money will be transferred from the sender’s bank account to the receiver’s account within a day or two. For this type of transfer, there won’t be any charges as it is a part of an Instant fund transfer scheme run by the National Payments Corporation of India (NPCI). Strong points for using IMPS are:
- The receiver can keep track of transactions because every transaction will show in his bank statement or account balance.
- This service is accepted by all major banks.
- There will be an immediate effect as the money will reach the receiver’s account within 3-5 working days.
- The transfers are free of charge.
- There won’t be any charges for using this service from any person who has an account in India. However, there might be charges if the receiver is not in India.
IMPS does not require registration. Moreover, to initiate an IMPS, it requires only a mobile phone number, and the banks which are using this service are banks that have an IMPS link. With this service, the funds sent to the receiver will reach his bank account within 3-5 working days. Even it is a part of an Instant fund transfer, the receiver must be in India; otherwise, funds will be transferred to someone else’s account.
What is NEFT?
National Electronic Funds Transfer Service, on this service, money will be converted from the user’s bank account to the receiver’s bank account within a day or two. Moreover, for this type of transfer, there won’t be any charges for using the NEFT facility. However, the receiver must have an account in India. Otherwise, the money will not be converted and would go to someone else’s bank account.
NEFT is a virtual funds carrying system that initiates person-to-person money conversations between bank accounts in India. Moreover, the funds will be transferred as soon as the request is sent through the swift network, and funds will reach a bank account within fifteen minutes to an hour if the user is transferring in Indian Rupees or 24 hours if the user is transferring internationally.
The National Electronic Funds Transfer (NEFT) System offers the amenity of a user to electronically pass on money from his or her account to another account using internet banking, any other mobile application, or through a participating bank’s branch where NEFT transfers take two days to process.
Main Differences Between IMPS and NEFT
- IMPS has the potential to initiate the transfer of funds abroad virtually using the Internet, whereas NEFT has the potential to initiate transferring of funds from one bank branch to another bank branch.
- IMPS is on the market at any time throughout the year, whereas NEFT is on the market only during functioning days.
- IMPS bank transferability is instantaneous, whereas NEFT bank transferability will be fetched within a day or two.
- The promptness of IMPS is high, whereas the promptness of NEFT is high.
- IMPS has a transaction diminution of 1 lakh, whereas NEFT doesn’t have any transaction diminution.
Conclusion
IMPS and NEFT terms refer to different methods of funds transfer, and their differences lie in the time frame and the number of transactions that can be made through them. Both IMPS and NEFT are well-liked choices for larger amount transfers because of their speed in processing large amounts of money.
However, NEFT System offers the provision to an individual to virtually impart the money from one user’s account to another account using internet banking or by any other mobile application. If you are looking to send money to someone in India, the mainstream way is through NEFT, or If you want to transfer the amount in person, IMPS is your best choice.
References
- https://www.emerald.com/insight/content/doi/10.1108/JMD-04-2017-0144/full/html
- https://ieeexplore.ieee.org/abstract/document/9388452/
- https://ieeexplore.ieee.org/abstract/document/9388452/