Know the difference between RTGS, NEFT and IMPS

19 Oct 2020  Read 4961 Views

This excerpt will hit you differently if you are a business owner. Several individuals come and try their hands in the business, but only those get a flavour of success which not only have ideas but also possess the knowledge to turn those ideas into success. 

There are a lot more things to understand, which will help you in doing wonders in your business. One such thing which will bring a huge difference in the way you make your daily business transactions in India is learning about the banking systems. Understanding the terms like NEFT, RTGS, and IMPS will help you ease your daily business operations.

If you are one of those business owners who have just started implementing the digital payment systems, then don't just restrict your knowledge to card payments. One should go beyond that and think of these incredible fund transfer systems. So, you must have heard of this trio before and might also be aware that these are used to transfer funds domestically from one account to another. But do you know, what's the difference between the three? Which among NEFT, RTGS, and IMPS is the best? Which one has more advantages at your end? 

Well, to know the answers to these questions, one should have an in-depth knowledge of the three. So, let's just peek in and see turn by turn what these methods are and understand the difference between them. 

Recently, the Reserve Bank of India (RBI) had made significant amendments to these banking service

In This Article

  What is NEFT?

  What is RTGS?

  What is IMPS?

  Difference between NEFT, RTGS and IMPS?

  Closing thought

What is NEFT?

National Electronic Fund Transfer (NEFT) allows individuals, organizations, and companies to do one-to-one bank transfers digitally. The interesting thing here is that even if you and your recipient are associated with different banks, you can easily deposit funds into their banks using NEFT. But the condition applied, both the bank accounts must be NEFT enabled. 

However, in today's world where everything has gone digital, there would hardly be any bank which does not provide the facility of NEFT. With NEFT, there is no limit of a minimum or maximum amount that can be transferred. However, there is a cap of Rs. 50,000 if you are doing an in-person cash-based remittance within India. To start with the process of transferring funds via NEFT, you must have your recipient's bank account information along with their bank's IFSC (Indian Financial System Code), a unique identifier for their bank branch. 

The great thing here is that there are no charges to receive money via NEFT. Also, the RBI recently launched a push that says there will be no charges from now onwards for doing an NEFT transfer. Now NEFT is also availabe for 24/7. Settlements are done on a 30 minutes basis and in batches. All the transfer requests are received within those 30 minutes, and then they are processed together. After this, a notification will come at the recipient's end that they can expect the transfer of funds within 2 hours of batch settlement. 

So as you see, the NEFT transfer is a quick and smooth process. You can simply use this to send money to your friends, family, colleagues, or clients. With money in your bank accounts, NEFT payments can be made for a dinner bill to hefty business payments. However, as mentioned earlier, NEFT steps in as a solution only when the payments are to be made domestically. For transferring funds outside India, NEFT cannot be used. 

What is RTGS?

Real-Time Gross Settlement (RTGS), is one more option that comes into the picture for online money transfer through bank accounts. It is called real-time gross settlement because the transfer happens in the real-time and the settlement is not done in batches rather on a one by one basis. Currently, the enabled bank branches in India are up to 1,40,000. 

Like other options, RTGS is also a very much secured option. They ensure a safe transfer of funds from one bank account to another. But the one problem that comes under the RTGS funds transfer is that it only settles during the banking hours. So if there is a bank holiday or after working hours, your transaction will have to wait unless and until the banks open back up,but now RGST is also Avaibale for 24/7. Another different thing about RTGS transactions is that banks are free to decide their own charges for their services. In RTGS, the charges are not set by the Reserve Bank of India. 

The point where RTGS differs from the other two is that it is primarily reserved for big amount transactions. The requirements for the transaction with RTGS includes: 

  • Amount.
  • The account number from which the money has to be transferred.
  • Bank name and the recipient.
  • Account number of the recipient. 
  • IFSC code of the recipient.

Once these details are submitted, the bank account of the recipient must be credited with the transaction amount either immediately or within 30 minutes. 

The minimum amount required to avail the services of RTGS is Rs. 2,00,000. Therefore it won't be applicable for paying small bills like dinner bills or shopping bills. But it will act as a solution for big transactions which include making a payment for purchasing houses, hefty business transactions, etc. 

What is IMPS?

NEFT and RTGS are very commonly used, and their names are always taken together. But when it comes to IMPS, it has not received that fame till now. 

Immediate Payment Service ( IMPS) is also a real-time fund transfer service that grants instant interbank transfers from the bank account using your banking apps, ATM, mobile payment, SMS, or at the bank branch. Your bank must be enabled with the facility of IMPS for availing its services. In this case, it is similar to NEFT. A total of 498 banks are associated with the IMPS facility.

Perhaps the best thing about IMPS is that the service is available 24x7. Yes, we can transfer funds 365 days with IMPS. Therefore, IMPS goes by its name, as it immediately or at any required point of time, transfers money from your bank account to the beneficiary bank account.  

You can use this facility by giving your recipient's:

  • Adhar Card Number.
  • IFSC and Account Number.
  • Mobile number as well as the MMID code that is generated.

The IMPS service is very handy and can be used anytime. Whether you are in the metro, park, shopping in stores, sitting at home, or the office, you can easily make big transactions within comfort, with just the mobile number of the recipient. As in RTGS, the charges of IMPS are also in the hands of the banks. But recently, the State Bank of India waived off their charges for IMPS. 

Just as the charges of IMPS are in the hands of the banks, the limit of transactions is also something that is decided by them. But in most of the cases, the minimum amount of transaction is Rs. 1 Lakh and the maximum is Rs. 2,00,000

All in all, various payments could be made within a fraction of seconds using this advanced technology. 

What Is The Difference Between NEFT, RTGS, and IMPS?

Basis of Comparison

NEFT

RTGS

IMPS

Minimum Transfer Value

Re. 1

Rs. 2 lakh

Re. 1

Payment Options

Online & Offline

Online & Offline

Online 

Maximum Transfer Value

No Limit

No Limit

Rs.2 lakh

Fund Transfer Speed

2 hours (subject to cut-off timings and batches)

Immediate

Immediate

Settlement Type

Half Hourly Basis

Real Time

Real Time

Service Timings

Available 365 Days:24/7

Available 365 Days:24/7

Available 365 Days:24/7

Inward Transaction Charges

No Charges

No Charges

Decided by Individual Member Bank PPls

Managed BY

RBI

RBI

NPCI 

Closing Thought 

Living in today's world, we all understand the importance of digitization. Whether it's about reservations of hotels, booking movie tickets, air tickets, train tickets or it's about making massive payments of business-related affairs, we all need a digital mode of transfer of funds which not only steps in to solve our problems of online transfer but also is safe and secured. 

NEFT, RTGS, and IMPS are all very important and play a vital role not only in the business world but also in the daily routine of life. It solves those old school problems of forgetting wallets at home and then becoming blank about how to make payments. 

This banking services trio also comes in as a saviour. Using this trio is very efficient, but one should always remember that there are underlying conditions associated with them. So, just remember those conditions and avail the services of NEFT, RTGS, and IMPS wisely and decently. 

About the Author: Aditi Sagar | 34 Post(s)

Aditi is born and brought up in New Delhi. Right now she is in the 2nd year of her college. She is pursuing graduation from Deen Dayal Upadhaya College, Delhi University with Bachelor's In Management Studies degree. 

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