Different payment and settlement systems in India have made the task of transferring money from one bank account to another easier and faster. Now account holders don’t have to wait for days to receive money in their bank accounts. With the help of the latest digital payment systems, money can be sent and received in an instant anytime from anywhere. A large number of banks, private companies and government bodies along with others are adopting different payment and settlement methods. This has helped in reducing the gap between the entities and their customers and other concerned people. These methods are fast, convenient and useful for documentation purposes. They also are superior in terms of reliability and cost involved.
What are the different ways to transfer funds online in India?
India currently has various methods to transfer money online such as digital wallets, UPI, and more. However, the most commonly used online fund transfer method has been:
- National Electronic Funds Transfer (NEFT)
- Real Time Gross Settlement (RTGS)
- Immediate Mobile Payment Service (IMPS)
While NEFT and RTGS was introduced by RBI (Reserve Bank of India), IMPS was introduced by National Payments Corporation of India (NPCI). Read further to learn more about these three payment systems.
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National Electronic Funds Transfer (NEFT) is a payment system that facilitates one-to-one funds transfer. Using NEFT, people can electronically transfer money from any bank branch to a person holding an account with any other bank branch, which is participating in the payment system. Fund transfers through the NEFT system do not occur in real-time basis and the fund transfer settles in 23 half-hourly batches.
Real Time Gross Settlement (RTGS) is another payment system in which the money is credited in the beneficiary’s account in real time and on gross basis. The RTGS system is primarily meant for large value transactions that require and receive immediate clearing.
Immediate Mobile Payment Services(IMPS) is a real-time instant inter-bank funds transfer system managed by National payment corporation of India. IMPS is available 24/7 throughout the year including bank holidays, unlike NEFT and RTGS.
NEFT, RTGS and IMPS payment systems were introduced to offer convenience and flexibility to the account holders. To use these online fund transfer services, the remitter must have the basic bank account details of the beneficiary. The bank account details include the beneficiary’s name and bank’s IFSC. Though all the three payment systems are used for funds transfer, they exhibit a few differences.
Before learning their differences, let’s first learn some basic terms revolving around payment systems. These terms will help in understanding the difference between different payment systems better.
- Fund Transfer Limit
The maximum and minimum amount of money allowed for transfer by each payment system may differ. Therefore, fund transfer value is an important factor in determining which fund transfer method will be appropriate for a customer.
- Service Availability
Some payment systems are available for 24*7 while others have specific timings. Payment systems that are available 24*7 allow remitters to initiate money transfer anytime and any day. However, the funds will settle only when the service is available.
- Fund Settlement Speed
Different fund payment systems have different fund settlement speed. Fund settlement speed here is the total time consumed to settle money from one account to another after the transfer has been initiated.
- Fund Transfer Charges
Transferring money involves charges. As per RBI, fund transfer charges for each payment system are decided by banks. The amount charged is based on the amount to be transferred, transfer speed and other features offered by the bank.
Although there are various other important terms, these are the few basics that will help you understand the difference between NEFT, RTGS and IMPS.
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Comparison between NEFT, RTGS and IMPS
|Settlement Type||Half hourly batches||Real time||Real time|
|Minimum Transfer Limit||Re.1||Rs.2 lakh||Re.1|
|Maximum Transfer Limit||No Limit|
However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances within India and to Nepal under the Indo-Nepal Remittance Facility Scheme.
|No limit||Rs.2 lakh|
| 8:00 AM – 7:00 PM all working days except 2nd and 4th Saturday of the month|
Unavailable on Sunday and Bank Holidays
Operates in 23 half-hourly settlement batches
| 8:00 AM – 6:00 PM all working days|
Unavailable on Sunday and Bank Holidays
|Available 365 days 24/7|
No charges for inward transactions (at destination bank branches for credit to beneficiary accounts)
|No charges for inward transactions|
Charges applicable for outward transactions for amount:
Rs.2 lakh – Rs.5 lakh: not exceeding Rs.25
Above Rs.5 lakh: not exceeding Rs.50
GST is also applicable
|Charges for remittance through IMPS are decided by the individual member banks and PPIs. The taxes are included.|
|Payment Options||Online and Offline||Online and Offline||Online|