Difference Between NEFT, RTGS & IMPS

NEFT (National Electronic Funds Transfer), RTGS- (Real Time Gross Settlement), and IMPS – (Immediate Payment Service) are all electronic funds transfer systems in India, differing in transaction limits, timings, and processing speeds. NEFT operates in batches, settling transactions hourly, while RTGS processes transactions individually in real-time, with higher minimum transaction limits. IMPS offers instant, 24/7 fund transfers, including weekends and holidays, with lower maximum transaction limits compared to RTGS. RTGS enabled swift, secure fund transfers to apply for business loans, facilitating immediate investment and expansion.

Different Methods to Transfer Fund Online

Transferring funds online has become increasingly convenient with various methods available. One common method is through NEFT (National Electronic Funds Transfer), which allows individuals to transfer funds between different banks electronically. Another popular option is IMPS (Immediate Payment Service), which enables instant interbank fund transfers 24/7. UPI (Unified Payments Interface) has also gained popularity, offering a seamless way to transfer funds using a mobile number linked to a bank account. Additionally, mobile wallets like Paytm, Google Pay, and PhonePe provide a quick and easy way to transfer funds digitally. These methods have revolutionized the way Indians transfer money, making it faster, safer, and more efficient. The NEFT limit, RTGS limit, and IMPS limit vary depending on the bank and the transaction, ensuring flexibility for different transfer needs.Leverage RTGS for instant settlement of working capital loans on Lendingkart to maintain uninterrupted business operations.

IMPS Full Form and Meaning

IMPS stands for Immediate Payment Service, a real-time interbank electronic fund transfer service in India. It allows customers to transfer funds instantly and securely on a 24×7 basis. IMPS facilitates transactions through mobile phones, internet banking, ATMs, and bank branches, providing a convenient way to transfer money. This service is managed by the National Payments Corporation of India (NPCI) and has gained popularity due to its speed and accessibility. IMPS has revolutionized the way people transfer money in India, offering a quick and reliable alternative to traditional methods like cheques and demand drafts. SME loans processed through RTGS ensure rapid disbursement, empowering small businesses with immediate financial support.

NEFT Full Form and Meaning

NEFT, or National Electronic Funds Transfer, is a popular electronic payment system in India, facilitating one-to-one fund transfers. This system operates on a Deferred Net Settlement (DNS) basis, settling transactions in batches. NEFT transactions are processed in half-hourly batches, providing near real-time transfer of funds. This service is available on all days except for the 2nd and 4th Saturdays of the month, Sundays, and other public holidays. NEFT transactions do not have any upper limit, making it ideal for large transactions. The popularity of NEFT continues to grow due to its convenience and widespread acceptance among banks in India. Utilise RTGS for Mudra loans to fast-track financial assistance to budding entrepreneurs in the informal sector.

RTGS Full Form and Meaning

RTGS stands for Real Time Gross Settlement. It is a system used for transferring funds from one bank to another on a real-time and gross basis. In India, RTGS transactions are processed continuously throughout the RTGS business hours. The minimum amount that can be transferred using RTGS is ₹2 lakh, and there is no upper limit. RTGS is a safe and secure way to transfer funds, as it reduces the risk of settlement and credit risk. This system is widely used for large-value transactions that require immediate clearance.

Difference Between NEFT, RTGS and IMPS

Feature	NEFT	IMPS	RTGS
Full Form	Full form of NEFT is National Electronic Funds Transfer	Full form of IMPS is Immediate Payment Service	Full form of RTGS is Real Time Gross Settlement
Settlement Time	Half-hourly batches	Real-time	Real-time
Minimum Amount	No minimum limit	Rs. 1	Rs. 2 lakh
Maximum Amount	No maximum limit	Rs. 2 lakh per transaction	No limit
Transaction Time	Available 24×7, including weekends and bank holidays	Available 24×7, including weekends and bank holidays	Available during RTGS working hours, i.e., 7:00 AM to 6:00 PM on weekdays and 7:00 AM to 1:00 PM on Saturdays (excluding Sundays and bank holidays)
Cost	Charges vary depending on the amount and the bank’s policy	Charges vary depending on the amount and the bank’s policy	Charges vary depending on the amount and the bank’s policy
Use Cases	Suitable for low to medium value transactions	Suitable for instant fund transfers	Suitable for high-value transactions where real-time clearing is required
Fund Transfer	Batch processing	Immediate	Immediate

Businesses can avail themselves of different types of loans such as quick business loan each designed to meet specific financial needs and requirements. Lendingkart provides working capital loans for small businesses which helps them grow.

Important Things to Consider Before Initiating a Fund Transfer

• Transaction Type: Determine the type of transfer you need — NEFT, IMPS, RTGS—based on factors like urgency, amount, and recipient. As the transaction types are subjected to limits like minimum and maximum amount, it is important to choose the most fit transaction type while initiating the payment. If the transaction amount is less than INR 2 lacs, then the initiator can choose either neft or imps, as neft and imps both have no minimum transaction amount restriction.
• Charges and Fees: Be aware of any charges or fees associated with the transfer, as they can vary based on the bank and transaction type. It is essential for the initiator to be vary and informed of the fees or transaction charges that can be charged on each transaction. Also, transaction charges can also depend upon the volumes of transactions in a set timeframe.
• Transaction Limits: Check the minimum and maximum transaction limits for the chosen transfer method to ensure it meets your needs. A payment initiator can choose the transaction type based on the speed or settlement time, however there are transaction limits in place for each transaction type. The payment initiator should be aware of the same, and can initiate the payment accordingly. For example, there is no minimum or maximum amount limit in case of NEFT, however the settlement cycle works every 30 mins. There are instant settlement transaction types available in the form of IMPS – No minimum limit, however maximum transaction limit is INR 2 Lacs. Whereas, RTGS can only work for transactions amounting INR 2 lacs or more.
• Timing: Consider the timing of your transfer, as some methods may have restrictions on when transfers can be initiated or processed. For low value transactions, i.e. NEFT and IMPS, a user may wonder – IMPS or NEFT which is faster? Well in this case, IMPS offers real time settlement, whereas NEFT offers settlement every 30 minutes. Hence, it is important for an user to understand various settlement speed, and transaction limits that come with different transaction types.
• Recipient Details: Double-check the recipient’s details, including account number and IFSC code, to avoid any errors that could lead to delays or failed transactions.  Error in recipient details can not only result in failed transactions, however a user may face a scenario where due to erroneous transaction details, the money is credited to the wrong person, or there is a possibility of the money being debited from the remitter’s account, and due to mismatch of details, a reversal happening after a couple of days – essentially wasting remitter’s time and effort.
• Confirmation: Ensure you receive a confirmation of the transaction from your bank or payment service provider for your records and peace of mind. There is a possibility that you may not receive the SMS alert on your registered mobile number, in such cases, a user can simply login on their internet banking application/website, and check for recent transactions. It may take some time for the transaction to be updated in the records, it is advisable to check the transaction status after 30 minutes
• Security: Use secure channels and methods for initiating transfers to protect your financial information and funds from unauthorized access or fraud. It is advisable to leverage only personal devices in case you’re initiating the transaction using internet banking as shared devices are susceptible to data theft. In case you’re using offline channels to initiate a transaction, then doing so from the bank branch is advised. Private unauthorized third party money transfer mechanism can result in financial loss
• Bank Policies: Familiarize yourself with your bank’s policies regarding fund transfers, including any additional security measures or requirements they may have. Being familiar with the bank policies not only help with compliance but can also help in quick understanding of any discrepancy and navigating the correct touchpoint for any specific queries. It can also save the user from any unexpected fees and charges, which may arise due to ignorance of the policies
• Customer Support: Know how to contact customer support in case you encounter any issues or need assistance during the transfer process. Most banks have a dedicated customer service desk, operating to help customers resolve their queries or concerns.For some customers, banks also provide a dedicated relationship manager who’d look after your relationship with the bank and can help with fast track query resolution.
• Transaction History: Keep track of your transaction history to monitor your finances and verify that transfers are completed successfully. All thanks to the digitization, a user can electronically search through years of transaction history, and download the same. If you do not leverage internet banking, then you can simply get your passbook printed for the desired timeframe.

Also Read: GST Payment Process, Rules & Form

Important Terms  related to online money transfer

1. IFSC (Indian Financial System Code): A unique code assigned to each bank branch in India that facilitates electronic funds transfer. This code is a unique identifier for each bank branch. It can help correctly identify branches which help in faster transaction settlements.
2. NEFT (National Electronic Funds Transfer): A system of electronically transferring funds between banks in India. There is no minimum or maximum per transaction limit for NEFT transactions, and the transaction settlement time is up to 30 minutes
3. IMPS (Immediate Payment Service): An instant interbank electronic fund transfer service in India. As the name suggests this transaction type enables for real time payment, however the only drawback is the maximum limit for per transaction i.e. INR 2 lacs
4. RTGS (Real Time Gross Settlement): A real-time fund transfer system that settles transactions individually and is primarily used for high-value transfers. Someone may wonder – RTGS or NEFT which is faster? Well the answer is RTGS as it is a real time payment mechanism, however, one drawback of RTGS compared to NEFT is that RTGS can only be initiated for high value transactions – i.e. individual transaction above INR 2 lacs, for transactions over INR 2 lacs, both NEFT and RTGS would work, with only difference being settlement time
5. UPI (Unified Payments Interface): A real-time payment system that allows transferring money between any two bank accounts using a mobile phone.
6. KYC (Know Your Customer): A process to verify the identity of customers as required by regulatory authorities. As the name suggests in this process, the authorities collect basic information like photograph, address, name, signature, etc. This is one of the basic requirements, and one needs to complete this process at the time of account opening as well as during regular intervals.
7. OTP (One-Time Password): A unique password sent to the user’s mobile phone or email for authentication during online transactions. As the name suggests this is a one time password, meaning it will be unique for every transaction, and OTPs usually have a validity timeframe, post which even correct OTP will not be accepted to authenticate the transaction.
8. Beneficiary: The person or entity receiving the funds in a money transfer. Beneficiary information is important to dial a payment, as it essentially is the location where the money is supposed to reach.
9. Transaction ID: A unique identifier assigned to each transaction for tracking and verification purposes. A person can leverage this transaction ID in multiple ways like checking transaction status online, cross-verifying transaction details using the transaction IDs, etc. It also serves as a great identifier for audit purposes
10. Chargeback: A reversal of a transaction, usually initiated by the bank, in response to a dispute by the account holder. Chargeback can happen in cases where the destination bank is unable to settle the transaction citing reasons such as account on hold, or any other regulatory or identifier issues with the account
11. Encryption: The process of converting data into a secure code to prevent unauthorized access. Encryption can help secure the transaction data and prevent frauds resulting in financial loss.
12. Two-Factor Authentication (2FA): A security process that requires two forms of identification before granting access, commonly used in online transactions. One classic example of 2 Factor Authorization would be a payment initiator having to confirm the card details and cvv and also confirming OTP received on the registered mobile number. Essentially making the transaction more secure and less susceptible to fraud and misuse.
13. Phishing: A fraudulent attempt to obtain sensitive information by disguising as a trustworthy entity in electronic communication. Phishing is usually done by making a communication in the form of text or email seem trustworthy with embedded malware waiting for the user to click to gain information.
14. Merchant Account: A type of bank account that allows businesses to accept payments through various methods, including online transfers.

Wallet: A digital wallet that stores payment information for online transactions, often used for quick and easy payments.

Frequently Asked Questions

 

What is the minimum amount for an IMPS transfer?

The minimum amount for an IMPS transfer can vary depending on the bank and the service provider. However, typically, there is no minimum limit for IMPS transactions.

Are there any extra charges for an IMPS transfer?

Extra charges for an IMPS transfer may apply based on the amount being transferred and the bank’s policy. It is advisable to check with your bank for the exact charges applicable to your transaction.

How many times can NEFT transactions be done in a day?

NEFT transactions can be done multiple times in a day, as per the RBI guidelines. There is no limit on the number of NEFT transactions that can be initiated by an individual or a business in a day.

Is IMPS a better mode of transfer than NEFT and RTGS?

Whether IMPS is a better mode of transfer than NEFT and RTGS depends on the specific requirements of the transaction. IMPS is preferred for instant transfers, while NEFT and RTGS are suitable for different value and timing needs. Select the method based on your transfer requirements.