Difference Between IMPS and NEFT

Comparative Analysis – NEFT vs IMPS

What is IMPS?

IMPS stands for Interbank Mobile Payment System. This system lets you transfer funds electronically from one account to another using mobile devices. You can also use other channels such as Internet banking and ATMs. Services are available 24 hours a day, including holidays and Sundays. The account’s beneficiary receives the credit immediately when a funds transfer request is made through mobile phones or Internet banking.

The Indian government introduced IMPS in 2010. Many banks have become part of the system over the years. When sending money through IMPS, sign up for mobile banking. However, most banks register their customers for mobile banking when opening their accounts. When money is received through IMPS, you will receive a message that the money has been credited to your account.

How To Use IMPS

Listed below are the steps involved in using IMPS -

• Step 1: Connect to Your Bank App: Open your bank's mobile application on your smartphone.
• Step 2: Select the Transfer Option: Look for the Transfer Funds option.
• Step 3: Money or Fund Transfer. Choose IMPS from the list of available transfer methods.
• Step 4: Enter Beneficiary Details: Add the beneficiary if you haven't done so. Enter their mobile number and MMID (Mobile Money Identifier) if required. If they have already been added, you can skip this step.
• Step 5: Choose Accounts: Select the account from which you want to send money (debit account). Choose the account where you want the money to be credited, if applicable.
• Step 6: Enter Amount: Type in the amount you wish to transfer.
• Step 7: Send the Money: Click Send to initiate the transfer.
• Step 8: Confirm the Transaction: A confirmation pop-up with your transaction details will appear. Click Confirm to proceed.
• Step 9: Authenticate with OTP: You will receive a One-Time Password (OTP) on your registered mobile number. Enter this OTP in the app to approve and complete your transaction.

Advantages of IMPS

• The money is immediately credited to the beneficiary’s account.
• The service is available 24 hours a day, including holidays and weekends.
• There is no minimum amount limit for the transfer of funds.
• Interbank and interbank payments can be made.

What is NEFT?

NEFT, short for National Electronic Funds Transfer, is a service that allows customers to transfer funds from one NEFT-enabled account to another. It was started in 2005, and the Reserve Bank of India maintains it. It is done through electronic messages, but funds transfers do not occur in real time. On weekdays, you can make transfers between 8:00 a.m. and 7:30 p.m. On Sundays and public holidays, you cannot make any transfers.

How to Use NEFT

NEFT has gained popularity due to its ease of use. Below is the working process.

• The customer fills out an application form that details the beneficiary.
• The client authorizes the bank to debit his account and remit the amount to the beneficiary.
• The bank sends the message to its aggregation centre (NEFT service centre). The aggregation centre sends the message to its clearing house for inclusion in the available batch.
• The clearinghouse classifies the fund transfer, and the remittance messages are sent to the destination banks.
• Once the destination banks receive the messages from the clearinghouses, they credit them to the beneficiary’s account.

Advantages of NEFT:

• The method is safe and effective, with fewer chances of errors.
• Low costs – Transferring money using this method is cheaper.
• High reliability – The Reserve Bank of India mainly coordinates the NEFT process. Therefore, this method is highly reliable.
• Eliminates delay – This process is fast and has helped to eliminate the delays associated with the movement of funds. Important transactions are settled within one day from the start of trading. This ensures that clients receive their funds on time.

Summary of IMPS vs. NEFT

• Thanks to the technology revolution, individuals can now electronically transfer funds from their accounts.
• IMPS and NEFT transfer funds from one bank account to another using electronic devices such as mobile phones and tablets. This has eliminated the need to queue in bank rooms for transactions.
• Individuals can choose the platform that suits them best since the transfer of funds is instantaneous in the case of IMPS and only takes two hours in the case of NEFT.
• There should be no doubts about the security of the services because they are highly secure.
• Both systems have pros and cons, and it is difficult to determine which is preferred easily because they are all efficient.

Conclusion

IMPS and NEFT are two of India's most important electronic payment methods, each with a different purpose. IMPS is used for instant fund transfers 24/7, which makes it ideal for urgent transactions with a maximum limit of Rs. 5 lakh per transaction. NEFT is processed hourly, which can be helpful for a non-time-sensitive transfer that does not have a cap on an amount, but it usually takes hours to get funds credited. Therefore, its choice depends upon the urgency and nature of the payment; where IMPS is preferred for immediate requirements and routine payments, NEFT suffices.

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