written by khatabook | December 7, 2022

IMPS, NEFT and RTGS: Read And Understand Different Digital Payment Systems

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Table of Content


The interbank mobile payment service (IMPS) is an instant real-time interbank electronic funds transfer service through mobile phones. The service is available 24/7, 365 days a year. 

National Electronic Funds Transfer (NEFT) is a nationwide payment system facilitating one-to-one funds transfer. The Reserve Bank of India (RBI) manages this system, and the NEFT system is used for customer-initiated fund transfers from one bank account to another. The sender initiates the transaction through the bank's internet website or mobile application. The Reserve Bank of India (RBI) introduced the RTGS system in 2004, and the RTGS system is a real-time gross settlement system (RTGS) for interbank transactions. 

Did You Know? IMPS, NEFT and RTGS are all electronic payment systems that allow for the transfer of funds between banks.  

Definition of IMPS, NEFT and RTGS

IMPS and NEFT are available 24x7, while RTGS operates only during banking hours. IMPS has the fastest transaction process among NEFT, RTGS and IMPS. IMPS is a secure, efficient, and cost-effective way to transfer funds instantly. The NEFT system is managed by the Reserve Bank of India (RBI) and uses the services of many banks in the country. Lastly, the RTGS system is used for transactions between banks, financial institutions, and inter-bank settlements. 

Importance of IMPS, NEFT, RTGS

Online fund transfers have been reliable, fast, and convenient. Using these services, you can transfer funds easily without having to wait in long queues to withdraw cash or try to be physically present at the bank. 

Also Read: Payment Gateways - Understand Payment Gateways, Types, Limitations & more

IMPS

IMPS stands for Immediate Payment System and is a real-time interbank electronic funds transfer system in India. It is a 24/7/365 service that allows customers to make instant interbank fund transfers. The system is designed to facilitate speedy and convenient banking transactions between banks and financial institutions in India.

The service is available through all major banks in India and can be accessed through mobile phones, internet banking, ATMs, and Point-of-Sale (PoS) terminals. 

The main advantage of IMPS is that it allows customers to send and receive money instantly. 

This is a great convenience for customers who need to send money quickly. Additionally, IMPS is available 24/7, so customers can use it anytime, anywhere. Another advantage of IMPS is that it can be used to pay for goods and services without needing a bank account. This makes it a great option for people who do not have a bank account or do not want to use their bank account to pay for goods and services. 

NEFT

The National Electronics Funds Transfer (NEFT) system is a nationwide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals can electronically transfer funds from any bank branch to any individual having an account with any other bank branch in the country participating in the Scheme.. RBI acts as the clearing house for all NEFT transactions.  

The main advantages of the NEFT system are:

  •  It is a simple and convenient way to transfer funds between banks. It is a safe and secure system using the Reserve Bank of India's (RBI) messaging system for transmitting messages.
  • NEFT is a fast system, as transactions are processed and settled in real time.
  •  It is a cost-effective system as there are no transaction charges for using the NEFT system. 

Also Read: All About UPI– United Payments Interface

RTGS 

The Real Time Gross Settlement (RTGS) is a system for instantaneous money transfers between banks. The RTGS system is used for high-value transactions and is therefore considered a very secure way of transferring money. The Reserve Bank of India (RBI) uses the system, and the banks are connected to the RBI through a secure network. 

The main advantages of RTGS are as follows: 

Faster Settlements

RTGS transactions are settled in real-time, which means that the beneficiary bank gets the funds immediately. This contrasts with other interbank settlement systems, where settlements are made on a batch basis. 

Reduced Risks 

RTGS transactions are processed in real time, reducing the settlement risks associated with other interbank settlement systems. Improved efficiency: The RTGS system handles high-value transactions, which results in improved efficiency and reduced transaction costs. Enhanced security: The RTGS system is highly secure and is backed by a well-defined legal framework. 

Also Read: Credit Card Bill Payment - What are Different Methods to Make Credit Card Bill Payment

Difference between IMPS & NEFT RTGS

There are three primary types of electronic funds transfer (EFT) in India: The Immediate Payment Service (IMPS), the National Electronic Funds Transfer (NEFT), and the Real Time Gross Settlement (RTGS) system. IMPS is the newest system, launched in 2010, while NEFT and RTGS have been operational since 2005 and 2004, respectively.  

IMPS

NEFT/ RTGS

IMPS transactions have a lower limit of 2 lakh

NEFT and RTGS have a higher limit of 10 lakh.  

In terms of safety, all three systems are equally safe.

Each system is safe

IMPS transactions can be made 24 hours a day, 7 days a week

NEFT, and RTGS operate half hourly batches from 8 am to 7 pm on all days except 2nd & 4th Saturday and Sunday & holidays.

All transfers are made through the Reserve Bank of India's (RBI) secure network, and customers must authenticate their transfers with a personal identification number (PIN). Overall, the IMPS system is the most convenient and fastest way to transfer funds in India. However, for larger transactions, NEFT and RTGS may be more appropriate. 

Things to Consider Before Initiating a Fund Transfer

There are a few important things to consider before initiating a fund transfer: 

1. Make sure you have the correct account information for the recipient. This includes the account number and routing number. 

2. Consider the timing of the transfer. Some banks may take a few days to process the transfer, so you will want to ensure the funds will be available when you need them. 

3. Check the fees associated with the transfer. Some banks may charge a fee for outgoing transfers, so you will want to factor that into your decision. 

4. Make sure you have enough funds available in your account to cover the transfer. You do not want to be caught with an overdraft fee! 

5. Review the terms and conditions of the transfer. Some banks may restrict how often you can transfer funds, so read the fine print. 

Considering these factors will help ensure a smooth and successful fund transfer. 

Conclusion

Immediate Payment Service (IMPS) is an interbank electronic instant mobile money transfer service through mobile phones. National Electronic Funds Transfer (NEFT) is a nationwide system that facilitates the interbank transfer of funds. The Reserve Bank of India (RBI) operates this system. Real Time Gross Settlement (RTGS) is an electronic funds transfer system that facilitates the transfer of funds from one bank to another in real time. All three systems are safe and secure and allow for the transfer of funds between banks quickly and efficiently. 
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FAQs

Q: How long does an IMPS, NEFT, and RTGS transaction take to get processed?

Ans:

IMPS transactions are processed immediately, which means that the funds are transferred from one account to another in real time. NEFT transactions are processed in batches, which means that the funds are transferred from one account to another in batches. The time is taken for an NEFT transaction to get processed on the batch in which the transaction is processed. RTGS transactions are processed in real time, which means that the funds are transferred from one account to another as soon as the transaction is initiated.

Q: What is the difference between IMPS, NEFT, and RTGS?

Ans:

The main difference between IMPS, NEFT, and RTGS is the time taken for the respective transactions to get processed. While NEFT and RTGS are batch-processing systems, IMPS is a real-time system. This means that the transactions processed through IMPS are processed immediately, while the transactions processed through NEFT and RTGS are processed in batches.

Q: What is RTGS?

Ans:

The Real Time Gross Settlement (RTGS) System is a funds transfer mechanism where the transfer of money or securities takes place from one bank to another on a "real-time" and "gross" basis. This is the fastest possible money transfer system through the banking channel.

Q: What is NEFT?

Ans:

The National Electronic Funds Transfer (NEFT) System is an electronic funds transfer system maintained by the Reserve Bank of India (RBI) that enables customers of banks in India to transfer funds between any two accounts, irrespective of whether they maintain them with the same bank or not.

Q: What is IMPS?

Ans:

IMPS (Immediate Payment Service) is an interbank electronic instant mobile money transfer service through mobile phones. IMPS offers an interoperable platform for all banks in India for 24*7*365 transactions.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.