The online or electronic fund transfer system in India has made the process of transferring money from one bank account to another a lot easier. The account holder can now transfer money instantly from one bank account to another with the help of the latest digital payment services. For the purpose of transferring money, many banks provide a variety of options based on a user’s requirements and other significant factors. The most widely used online payment services include NEFT, RTGS, and IMPS.
Online Fund Transfer Methods
The majority of banks in India provide users with various methods to transfer money online such as UPI, digital wallets, and more. The most widely used online fund transfer methods are NEFT, RTGS, and IMPS. However, it is to be noted that in order to transfer money using any of these three payment services, the use of the IFSC Code is mandatory.
IFSC or Indian Financial System Code is an 11-digit alphanumeric code that uniquely identifies all banks and their respective branches participating in the online fund transfer process. The IFSC Code is assigned to each bank branch by the Reserve Bank of India (RBI) to monitor the online transfer of money. Users can also search bank addresses by IFSC Code and process hassle-free transfer of funds from one bank account to another.
1. NEFT- National Electronic Fund Transfer
NEFT is a nationwide payment system facilitation one-to-one fund transfer. The process is based on a deferred arrangement that allows the transfer of money in different sets or batches. For any NEFT transaction, the respective banks should be NEFT-enabled. Also, the basic bank details and IFSC Code of the beneficiary’s bank branch needs to be provided for the fund transfer process to take place.
2. RTGS- Real Time Gross Settlement
RTGS is another online money transfer service that enables the transfer of funds from one bank to another on a real-time or orderly basis, i.e the beneficiary receives the amount in approximately 30 minutes of transfer. RTGS service is generally used for high-value transactions of Rs. 2 lakh and above. To transfer money via RTGS, the user is required to provide the IFSC code of the beneficiary’s bank branch for successful transfer.
3. IMPS- Immediate Payment Service
IMPS is a real-time fund transfer that enables an instant 24X7, interbank electronic money transfer service. IMPS allows the transfer of funds instantly and is hence considered a safe and economical option. The service is accessible via mobile, ATM, SMS, branch, or USSD. It is the fastest mode of money transfer and can be availed on national as well as public holidays. The remitter needs to provide the account number and IFSC Code of the beneficiary’s bank branch to initiate fund transfer via IMPS.
*If the individual opts for IMPS using mobile banking, he/she would need the MMID (Mobile Money Identifier) code for IMPS.
Note: It is to be noted that the NEFT and RTGS payment services were introduced by the Reserve Bank of India (RBI), while the IMPS service was introduced by NPCI (National Payments Corporation of India). Online fund transfer systems are not only fast and convenient but also are essential for accounting and documentation purposes.
Difference between NEFT, RTGS, and IMPS
For the user to initiate the online fund transfer system via any of the electronic payment services, certain parameters are to be considered before opting for the process. In order to process the online fund transfer system, the remitter is required to provide the basic bank details of the beneficiary including the beneficiary’s account number, name, and IFSC Code of the branch to which the remitter intends to send the money.
Considering significant parameters including the value of the transaction, speed of transfer, transaction charges, service availability, and others, each of the payment services tends to fulfill different requirements of the customers. Given below are the basic differences between NEFT, RTGS, and IMPS services. Though each of them have their own set of advantages and disadvantages, they surely provide convenience and flexibility to the customers.
| Payment Service | |||
| Basis of Comparison | NEFT | RTGS | IMPS |
| Process | The process is based on Deferred Net Settlement (DNS) and the transfer of funds is carried out in 48 half-hourly batches starting from 12:30 am to 12:00 am | Payment process in which the money is credited in the beneficiary’s bank branch in real-time and on a gross basis | Real-time and instant interbank fund transfer process, IMPS is considered a secure & faster mode of fund transfer |
| Minimum Transfer Limit | Rs.1/- | Rs.2 Lakhs | Rs.1/- |
| Maximum Transfer Limit | No limit | No limit | Rs. 5 lakhs |
| Operational Timings | Available 24×7, 365 days (including bank holidays) | Available 24×7, 365 days (including bank holidays) | Available 24×7, 365 days (including bank holidays) |
| Payment Options | Online and Offline | Online and Offline | Online |
| Inward Transaction Charges | No charges | No charges | Decided by individual member banks and PPIs |
*The above-given information is as per the guidelines of RBI (Reserve Bank of India)
Key Factors Differentiating NEFT, RTGS, and IMPS
There are certain important factors that distinguish the online fund transfer methods from each other. While using these services, users can transfer funds easily without having to wait in long queues for processing financial transactions in the bank.
- Fund value- Depending on the amount of fund that needs to be transferred, the originator needs to choose the particular payment service that will cater to his or her specific requirement. Likewise for carrying out large value transactions, the RTGS payment service is preferred
- Fund Transfer Limit- The maximum and minimum amount of money allowed for transfer by each payment system is different. Hence, this is an important factor to be kept in mind before choosing the ideal transfer mode
- Service Availability- The NEFT and IMPS and RTGS services could be accessed 24×7, throughout the year (including bank holidays).
- Transaction Speed- In NEFT, the fund is settled in 48 half-hourly batches whereas RTGS and IMPS transfers take place in real-time and are usually completed within minutes
- Service Charge- The fees charged for the fund transfer process varies between the three transfer modes. The cost of RTGS is comparatively higher as compared to NEFT and IMPS.
