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.
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.
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. The NEFT transactions can be carried out in bulk and repetitively.
Real Time Gross Settlement (RTGS) is another payment system in which the money is credited in the beneficiary’s account in real time. This fund transfer method is typically used to transfer enormous sum of money.
IMPS is an abbreviation for Immediate Mobile Payment Services, which is an instant inter-bank funds transfer system. This funds transfer method is more customer-centric than the other two as it allows the remitter to transfer funds using their smartphones.
NEFT, RTGS and IMPS payment systems were introduced to offer convenience and flexibility to the account holders. To use these online fund transfer services, remitter (person who wants to transfer money) must have the basic bank account details of the beneficiary (person to whom the money is to be transferred). 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 among 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 you.
- 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. In addition, the government also imposes GST for each transaction.
Although there are various other important terms, these are the few basics that will help you understand the difference between NEFT, RTGS and IMPS.
A Comparison Table for NEFT, RTGS and IMPS
|Settlement Type||Hourly Batches||One-on-one Settlement||One-on-one Settlement|
|Minimum Transfer Limit||Rs.1||Rs.2 lakh||Rs.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|
|Funds Transfer Speed||2 hours (subject to cut-off timings and batches)||Immediate||Immediate|
|Service Timings||Weekdays (12 batches)
8:00 AM – 7:00 PM
Saturdays (6 batches)
8:00 AM – 1:00 PM
Sunday and Bank Holidays
9:00 AM – 4:30 PM
9:00 AM – 2:00 PM (for settlement at RBI’s end)
Sunday and Bank Holidays Unavailable
The timings that banks follow may vary.
|Transaction Charges||No charges for inward transactions (at destination bank branches for credit to beneficiary accounts)
Outward transactions at originating bank branches – charges applicable for remitter for amount:
Up to Rs.10,000 is Rs.2.50
Rs.10,000 – Rs.1 lakh is Rs.5
Rs.1 lakh – Rs.2 lakh is Rs.15
Rs.2 lakh and above is Rs.25
GST is also applicable
|No charges for inward transactions.
Charges applicable for outward transactions for amount:
Rs.2 lakh – Rs.5 lakh is Rs.30
Rs.5 lakh – Rs.10 lakh is Rs.55
Also, an additional amount charged from Re.1 to Rs.5 if transaction is done after 12:30 PM.
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|