IMPS vs RTGS vs NEFT: A Comprehensive Guide for Banking Software Functionality

In the realm of electronic fund transfers, three systems are the most prominent – Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and National Electronic Funds Transfer (NEFT). Each system offers distinct advantages and caters to different needs, thereby making it essential for individuals to understand their differences and choose the right system for funds transfer.

Let’s look at the comparative analysis of IMPS vs RTGS vs NEFT to grasp their functionalities, benefits, and transaction charges.

What are the Different Ways to Transfer Funds Online?

India provides different methods for transferring money online like digital wallets, UPI, etc. However, some of the most commonly used methods that are used for transferring funds online are enumerated below:

• National Electronic Funds Transfer (NEFT)
• Real-Time Gross Settlement (RTGS)
• Immediate Mobile Payment Service (IMPS)

NEFT and RTGS were first introduced by RBI (Reserve Bank of India) and IMPS was introduced by National Payments Corporation of India (NPCI). Keep on reading to learn more about these payments.

What is IMPS?

Immediate Mobile Payment Services is a type of bank transfer system where payments are processed in real-time. This type of system is managed by National payment corporation of India. IMPS transactions are conducted 24/7 throughout the year even on bank holidays, unlike RTGS and NEFT.

Benefits of Using Immediate Mobile Payment Services (IMPS)

• You do not need the beneficiary’s IFSC code and account number to transfer funds
• Customers can process intrabank and interbank transactions
• IMPS fund transfer is also available for NRI customers for sending money from an NRI account to the account of an Indian resident
• You can access the IMPS system even on bank holidays
• With IMPS, you can transfer funds within a few seconds

What is RTGS?

RTGS stands for Real-Time Gross Settlement which is a type of electronic fund transfer system used by banks and similar financial institutions for high value and time value transactions. Under this system, funds are transferred from one bank account to another account in real-time.

Gross in RTGS highlights that every transaction is settled independently and in full without netting and offsetting against other transactions. This helps ensure that funds are transferred securely and without dependency on other transactions.

Benefits of Real-Time Gross Settlement (RTGS)

• There are less chances of counter-party default
• RTGS system enables you to transfer huge amounts of funds
• With funds being transferred online via RTGS, there are less chances of forgery
• RTGS funds can be transferred from anywhere and anytime with its 24/7 days functionality
• Real-time gross settlement payments remove the need for any physical instruments such cheques and demand drafts because it is completely electronic.

What is NEFT?

National Electronic Funds Transfer (NEFT) is a type of payment system which facilitates one on one funds transfer. By using NEFT, you can transfer funds from one bank branch to another, which accepts payments. Money transfers that take place via NEFT system do not happen in real-time and settle in 23 and a half hours.

Benefits of National Electronic Funds Transfer (NEFT)

• It allows individuals and organizations to transfer funds between different bank accounts electronically
• These transactions are processed in batches in a day for a faster funds transfer
• NEFT transactions can be initiated via net banking, mobile banking, and by visiting a nearby bank branch
• These transactions are secured via security measures authentication
• NEFT transactions is a cost-effective option as it does not charge any fee as compared to other payment methods.

Comparison of IMPS vs RTGS vs NEFT

Let’s look at a quick comparison of IMPS vs RTGS vs NEFT based on their fund settlement time, payment options, full form, minimum and maximum transfer limit.

Full Form of IMPS, RTGS and NEFT

IMPS stands for Immediate Mobile Payment Service under which payments are processed in real-time. RTGS stands for Real-Time Gross Settlement which is used for high value transactions. NEFT stands for National Electronic Funds Transfer, used to transfer funds from one bank account to another.

Charges for IMPS, RTGS and NEFT

The charges for IMPS, RTGS and NEFT can vary depending on the bank you use and the mode of transfer (online or at the branch). Here is a brief overview of the charges levied by these payment systems:

NEFT: Under NEFT, no transaction fee is charged for the inward transaction which takes place for crediting money to the beneficiary accounts at the destination bank branch.

RTGS: No fee is charged for inward and online transactions. However, charges are applicable for outward transactions. You need to pay INR 25 for transferring funds between INR 2 to 5 lakhs. However, you must pay INR 50 for transactions exceeding the limit of INR 5 lakhs. Please note that GST is also applicable to the above-mentioned charges.

IMPS: Under the IMPS system, charges for IMPS transactions are determined by individual member banks and PPIs (Prepaid Payment Instruments).

Which is Better IMPS or NEFT or RTGS?

The choice between IMPS, RTGS, and NEFT depends on various factors such as transaction urgency, amount, and convenience. IMPS stands out for its immediate processing capability, making it ideal for time-sensitive transactions.

RTGS, on the other hand, is used to process high-value transactions with real-time settlement. NEFT offers a cost-effective solution for non-urgent transactions but has longer processing times.

IMPS vs RTGS vs NEFT: Frequently Asked Questions