Finance Buzz: Difference between Online Transfer Methods – IMPS, NEFT & RTGS

Today, there are numerous ways of transferring money online from one bank account to the other. The process is seamless and the recipient can receive the money in seconds. This kind of money transfer online can be done electronically via the internet without direct bank staff involvement. Money can be transferred within or across financial institutions. Though today, UPI and digital wallets have caught up, back in the day, NEFT, RTGS and IMPS were the most commonly used online fund transfer methods. They still rule the digital payments turf. According to the Ministry of Electronics & Information Technology (MEITY), digital payment transactions totalled 7,442 crores in 2022. Post-demonetisation, the government is promoting a cashless economy for India. Digitalisation too has accelerated the use of online  payment methods.

Popular Online Money Transfer Options

1. IMPS

IMPS stands for Immediate Payment Service. As the name implies, you can transfer funds immediately using this method. It’s an instant funds transfer system managed by National Payment Corporation of India (NPCI). It works almost like UPI. It is available 24/7, throughout the year, even on bank holidays. The IMPS daily transaction limit is Rs. 5 lakhs. However, for every IMPS transaction made, the bank charges an additional nominal service tax. The transaction amount is set by the banks. The biggest advantage of IMPS is that it is 100% safe and secure as it is done through the bank’s official mobile application or through internet banking.

Advantages of IMPS

• Easily accessible
• Safe & secure
• Instant domestic fund transfer
• Available on bank holidays too – 365 days, 24/7
• Multiple transfer input options – IFSC, MMID and account number
• Works on both mobile and internet banking platforms
• Following payment completion, both payer and payee get instant notifications

2. NEFT

NEFT full form is National Electronics Fund Transfer. There is a difference between NEFT vs IMPS. It is not done in real-time, and therefore takes a few days to complete. It is regulated by the Reserve Bank of India (RBI). NEFT is an electronic method of transferring funds online. It is available on net banking and mobile banking. Since it is a one-to-one payment system, only banks that offer NEFT can process transactions. There is no cap on the number of transactions you can make through NEFT. However, to transfer funds via NEFT, you will need to add beneficiaries on the internet banking portal of your financial institution. Depending on the bank, beneficiaries may be added immediately or at a particular time slot.

As per RBI guidelines, payments processed via NEFT are settled in batches of 30 minutes or half-hourly batches. There is no maximum NEFT limit per day. On all NEFT transactions, a fee is charged which may range from Rs. 2.5 to Rs. 25, depending on the bank guidelines.

Advantages of NEFT

• NEFT transactions are fully secure since RBI is involved
• Once the transaction is completed, both parties get notified
• Easy, convenient and efficient fund transfer
• Cost-effective as it eliminates the need to use cheques or demand drafts
• Besides online money transfer, NEFT can also be used to clear loan payments, EMIs, credit card balances, and debts
• Round-the-clock availability
• NEFT Timings – 365 days, 24/7
• No charges levied by the RBI

3. RTGS

RTGS stands for Real Time Gross Settlement. If you compare NEFT vs RTGS, it’s almost the same. However, the minimum payment and the way it is credited to the destination account differs. As the name implies, the fund transfer happens in real time. The money is transferred from one bank account to the other in real-time, without any delay. RTGS is mainly used for high-value transactions. Once the transfer has been made by the payer; the payee gets 30 minutes to get the amount credited to his/her account. Also, unlike NEFT, RTGS does not follow any specific processing method. Each transaction gets processed with an instruction. The minimum RTGS transfer limit is Rs. 2 lakhs. RTGS transactions are done through net banking.

Advantages of RTGS

• Safe and secure method to transfer large amounts of money
• On RTGS transfers, banks do not incur additional charges on inwards transactions
• RTGS can be accessed 24/7
• All RTGS transactions are legal, thereby minimising fraud
• Can be done online or offline
• No limit on per day transactions
• Settlement occurs on a one-on-one basis

Though UPI has become immensely popular with youngsters these days, these traditional fund transfer methods still hold good. Now that you’re aware of the advantages of each of these methods, you can exercise caution when transferring funds online. All these methods are safe. All you need to know is the beneficiary’s account number and IFSC code, and how to use net banking, and you’re good to go.

What is meant by Net Banking?

Also referred to as internet or online banking, net banking is an electronic payment system. It gives customers the ease to access financial as well as non-financial banking products online, from the comfort of their home. Back in the day, customers had to visit the bank even for the smallest of things. However, net banking has made it extremely simple to manage all your bank-related tasks. Be it fund transfer, requesting a demand draft or checking of transaction statements, it can all be done using internet banking. Besides being convenient, it is also a secure method of banking.

To use net banking, you will have to first set up your internet banking account. Your bank will provide you with a user ID and password for your e-banking account through email or by post. Once you get the credentials, you can login to your account, and even change the password if you wish.

These are the following banking services you can access with net banking:

• Funds transfer
• Checking passbook
• Applying for a new cheque book
• Applying for a new DEBIT card PIN
• Loan application
• Paying utility bills, insurance, premium etc.
• Opening a fixed deposit

Internet banking is your one-stop solution for all your banking needs. It is completely safe, and allows you to carry out NEFT, IMPS and RTGS with ease.