Difference between NEFT, RTGS and IMPS

Electronic funds transfer methods like NEFT, IMPS, and RTGS can be beneficial if you frequently transfer money from one bank account to another. These digital payment systems provide a simple and quick solution to make transactions. 

Be it transfer limits, operating hours, or transfer speeds, these systems vary but serve a similar purpose. Hence, to choose between these three electronic fund transfer methods, you must know the difference between NEFT vs IMPS and RTGS.

Currently, IMPS, NEFT, and RTGS are the three kinds of electronic bank transfer systems operational in India. Before you understand the difference between IMPS and NEFT along with RTGS in detail, you must know about these fund transfer methods and how they work.

• IMPS 

Immediate Payment Service, also known as IMPS, is an interbank payment system established by the National Payments Corporation of India (NPCI). The service is available 24/7 and transfers the funds to the beneficiary’s account instantly. 

 

To process such transactions, banks generally levy a nominal fee known as the IMPS transaction fee, which is inclusive of GST. The amount of fees may vary from one bank to another. 

• NEFT

National Electronic Fund Transfer (NEFT) is an interbank payment system facilitated by the Reserve Bank of India (RBI). Like IMPS, NEFT is also available 24x7. However, it may take anywhere from 30 minutes to up to 2 hours for the beneficiary to receive the funds in their account.

 

This delay in transferring funds is primarily because the payment system processes the transaction requests in batches.

• RTGS

Real-Time Gross Settlement, or RTGS, is another interbank payment system operated by the Reserve Bank of India (RBI). These only facilitate high-value transactions of ₹2 Lakhs and above. Similar to IMPS, RTGS fund transfers are available 24X7 and get completed instantly.

 

When choosing between IMPS, NEFT or RTGS, consider the aspects of each of these payment systems to determine the one that aligns with your needs.

 

Here is how these payment methods differ from each other:

Now that you know the difference between NEFT and IMPS or RTGS, you can decide which one to use as per your payment requirements. 

 

Here are some of the factors you need to consider:

1. Transaction Fees

Depending upon the amount, RTGS transfers usually attract a fee ranging from ₹25 to ₹50 per transaction.

2. GST 

You are also liable to pay an 18% Goods and Services Tax (GST) on the specific transaction fees. 

3. Network 

Both the transferor bank and the transferee bank must be on the same payment network to use that particular system to transfer funds. 

As digital payment methods continue to become more popular in India, understanding the key terms related to NEFT, RTGS, and IMPS is crucial. 

 

Here are some of the most important terms that you need to know:

• IFSC Code: This is an 11-digit alphanumeric code that uniquely identifies every bank branch in India participating in electronic fund transfers. You need to provide the recipient's bank's IFSC code to initiate an NEFT or RTGS transaction.

• Beneficiary: The recipient of the funds is called the beneficiary. You need to provide their bank account number and IFSC code to transfer funds.

• Remitter: The person who initiates the transaction is called the remitter. The remitter needs to have the beneficiary's bank account number and IFSC code to transfer funds.

• Settlement Time: NEFT transactions are settled in hourly batches, while RTGS and IMPS transactions are settled in real-time.

• Transaction Reference Number: A unique reference number is generated for every transaction, which can be used to track the transaction's status. 

It is important to take certain precautions to ensure the safety of your money and personal information. 

 

Here are some precautions you should take when using these transfer systems:

• Verify the Recipient's Details

Before initiating a transfer, make sure you have the correct bank account number, IFSC code, and other necessary details of the recipient.

• Use a Secure Network

When initiating a transfer, make sure you are connected to a secure network, such as a password-protected Wi-Fi network or a secure mobile data connection. Avoid using public Wi-Fi or unsecured networks, as they may expose your personal and financial information to potential hackers.

• Use Two-factor Authentication

Make sure you follow the bank's guidelines for two-factor authentication to ensure the security of your transaction.

• Keep Your Device Updated

Make sure your mobile device or computer is updated with the latest security patches and antivirus software to avoid any potential security breaches.

• Keep Transaction Records

After completing a transfer, make sure you keep a record of the transaction details, including the date, time, and amount transferred to track the transaction and resolve any issues if there are any discrepancies.

• Be Aware of Phishing Scams

Be cautious of emails, text messages, or phone calls asking for your personal or financial information. These may be phishing scams designed to steal your information and compromise your bank account.

 

By following these precautions, you can use IMPS, NEFT, and RTGS transfer systems securely and confidently and avoid any potential risks associated with online financial transactions.