IMPS vs NEFT: A Detailed Comparison for Secure Money Transfers

In today’s digital age, transferring money has become faster and easier. Two of India’s most commonly used methods are IMPS (Immediate Payment Service) and NEFT (National Electronic Funds Transfer). While both offer a reliable way to move funds electronically, there are key differences between the two that can affect your choice depending on your needs.

This guide will break down the differences between IMPS and NEFT, help you understand their features, and explain which one may be more suitable for specific situations.

What is IMPS?

IMPS (Immediate Payment Service) is India’s instant, real-time electronic fund transfer system. Launched by the NPCI (National Payments Corporation of India), IMPS allows users to transfer money 24×7, including weekends and holidays.

Key Features of IMPS:

• Real-time transfer: Money is transferred instantly.
• Availability: Available 24/7, even on bank holidays.
• Transfer limits: The daily transfer limit can range from ₹1 to ₹5,00,000, depending on your bank.
• Charges: Transaction charges may vary from bank to bank, generally ranging between ₹2.50 to ₹25 plus GST.
• Usage: Primarily used for immediate, small to medium-sized transfers.

What is NEFT?

NEFT (National Electronic Funds Transfer) is another system for electronic fund transfers but differs significantly in how it operates. NEFT processes transactions in hourly batches throughout the day. Unlike IMPS, it’s not instant, but it is widely used for business and personal transactions alike.

Key Features of NEFT:

• Batch-wise transfer: Transfers are processed in batches, typically every half-hour.
• Availability: NEFT is available 24×7 as of 2020, including holidays, but transactions happen in batches.
• Transfer limits: There is no minimum or maximum transfer limit in NEFT.
• Charges: Generally cheaper than IMPS, with fees ranging between ₹2.50 to ₹25 plus GST.
• Usage: Best for non-urgent, large transactions.

IMPS vs NEFT: Key Differences

When Should You Use IMPS?

IMPS is the preferred option when transferring money immediately, regardless of the day or time. It is instrumental for smaller transactions like paying for a service, transferring funds between personal accounts, or sending money to friends and family.

Benefits of IMPS:

• Immediate fund transfer.
• Available 24×7, even on holidays.
• Secure and fast.

Drawbacks of IMPS:

• Transaction fees can be slightly higher.
• Maximum transfer limit is lower compared to other methods like RTGS.

When Should You Use NEFT?

NEFT is better suited for transactions that do not require instant transfer. If you are planning to send a large sum of money for business or personal reasons, NEFT can be an efficient and cost-effective option.

Benefits of NEFT:

• Suitable for large transactions.
• Lower transaction fees.
• Available 24×7, though transfers are not instant.

Drawbacks of NEFT:

• Transactions are not processed in real-time.
• May take longer for funds to reflect in the recipient’s account.

IMPS vs NEFT vs RTGS

For a broader comparison, it’s important to understand how RTGS (Real-Time Gross Settlement) fits into the picture.

RTGS is generally used for high-value transactions. It transfers funds instantly but is available only during bank working hours and has a minimum transfer limit of ₹2 lakh.

Which One Should You Choose?

Choosing between IMPS and NEFT depends on several factors, including the urgency of the transaction, the amount being transferred, and your budget for transaction fees.

• Choose IMPS if you need the money to reach the recipient instantly and the amount is not too large.
• Choose NEFT if the transaction is non-urgent and involves a larger sum of money.

FAQs

1. Is IMPS faster than NEFT?
Yes, IMPS is faster as it allows real-time fund transfers, while NEFT processes transactions in batches.

2. Is there a fee difference between IMPS and NEFT?
Both services typically charge similar fees, but IMPS fees may be slightly higher depending on the bank.

3. Can I use IMPS for large transactions?
IMPS is generally used for small to medium transactions, with a limit of ₹5,00,000. For larger transactions, NEFT or RTGS might be more suitable.

4. Is NEFT available 24×7?
Yes, NEFT is available 24×7, but transactions are processed in half-hourly batches.

5. Which is more secure, IMPS or NEFT?
Both IMPS and NEFT are equally secure as they are governed by the RBI and follow stringent security protocols.

By understanding the differences between IMPS and NEFT, you can make an informed decision based on your transaction’s urgency, amount, and purpose. If you’re looking to optimise your investments, platforms like Tap Invest can help you diversify your portfolio through a variety of fixed-income options, ensuring a secure financial future. Sign up today at tapinvest.in to get started!