NEFT, RTGS & IMPS
Most individuals use one or the other method of online money transfer in their lifetime. The convenience of transferring money online helps an individual in making most out of the modern technology-based banking services. When it comes to transferring money from one account to another, most banks provide multiple options based on various factors and customer’s requirements. Currently, banks provide multiple transfer methods such as National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Immediate Payment Service ( IMPS), etc. Based on the value of the transaction, the speed of transfer, service availability, and other factors, each of the transfer will provide different kinds of features and flexibility. Though each of them have their own advantages and disadvantages, they provide flexibility and convenience to the customers. Moreover, many banks have their own digital wallets to facilitate additional methods of fund transfers online.
Basic Difference Between NEFT, RTGS and IMPS
The following table illustrates the basic difference between the fund transfer methods -
|Minimum transfer value||Rs.1||Rs.2 lakh||Rs.1|
|Maximum transfer value||No limit||No upper limit||Rs.2 lakh|
|Type of settlement||Batches||One-on-one settlement||One-on-one settlement|
|Speed of settlement||2 hours (subject to cut-off timings and batches)||Immediately||Immediately|
|Service availability||Weekdays: 12 batches between 8:00 a.m. - 6:30 p.m. Saturday: 6 batches between 8:00 a.m. 1:00 p.m. Sunday and bank holidays: Unavailable||Working Days: 7:00 a.m. - 6:00 p.m.||24/7|
|Transaction fee||Up to Rs.10,000 - Rs.2.50 From Rs.10,000 up to Rs.1 lakh - Rs.5 From Rs.1 lakh up to Rs.2 lakh - Rs.15 From Rs.2 lakh up to Rs.5 lakh - Rs.25 From Rs.5 lakh up to Rs.10 lakh - Rs.50||Between Rs.2 lakh up to Rs.5 lakh - Rs.30 From Rs.5 lakh up to Rs.10 lakh - Rs.55 Time Varying Charge per Outward Transaction: 8:00 a.m. - 11:00 a.m. - Nil 11:00 a.m. - 1:00 p.m. - Rs.2 1:00 p.m. - 6:00 p.m. - Rs.5 Post 6:00 p.m. - Rs.10||Up to Rs.10,000 - Rs.2.5 From Rs.10,000 up to Rs.1,00,000 - Rs.5 From Rs.1,00,000 up to Rs.2,00,000 - Rs.15|
Online Fund Transfer Methods in India
Currently, Indians have the access to choose multiple fund transfer methods. The access to latest technology and an increasing demand for online-based service has left no stone unturned. From banking and financial institutions to governing bodies, and private businesses, the immense utilisation of latest technology has helped almost everyone to bridge the gap between their customer, partners, vendors, etc. Considering the ever increasing number of online users in India and all around the world, it is certain and undeniable that people like to transact digitally and prefer to send money online. Online fund transfers are not only fast, efficient, and convenient, but also useful for accounting and documentation purposes. Unlike other methods, online transfers are superior in terms of reliability and the cost factor as well.
Irrespective of which system is being used, NEFT, RTGS, or IMPS, they function as robust fund transfer methods which allow individuals and businesses to transfer money online from anytime and anywhere in the world. Nowadays most banks provide Net Banking facility to their customer. By using either a computer or a smartphone with internet, a bank account holder can use the fund transfer section to access any of the online banking services provided by the bank.
Types of Fund Transfer Methods
Though there are various systems for online transfer of funds, such as digital wallets, UPI, etc, NEFT, RTGS, and IMPS are the most common and highly used methods. In order to initiate a fund transfer, the individual who is transferring the money, also known as the originator or remitter, is required to have the basic account details of the beneficiary. Details such as the account number, beneficiary’s name on the account, IFSC , and the branch name are the most important and essential factors for using any transfer methods. It is the originator who is considered responsible for ensuring the correctness of the account details used for a transfer of fund.
Before understanding each of the fund transfer methods and learning the differences between them, it is essential to learn the basic factors that are involved in each of the payment systems. These important factors distinguish the online fund transfer methods on various parameters -
- Fund Value - The fund value is essential in determining which of the transfer methods are available for you. Depending on the value of the fund, the originator will need to choose a particular transfer method that will cater to his/her requirements. Moreover, in case of a newly registered beneficiary, a limited amount of fund is allowed to be transferred. If you are new to transferring funds online, it’s best to contact your bank or refer to their website in order to determine the best possible option of fund transfer.
- Timings (service availability) - There are certain methods of fund transfer that allows 24/7 online transfers while other have specified timings. The latter will allow a remitter to initiate a fund transfer any time of the day but the funds will settle only during the availability of the service. There are certain types of fund transfer methods that are not available during the weekend and public holidays while others operate round the clock throughout the year. This takes us to the next interesting feature of fund transfer methods.
- Fund Settlement Speed - After considering the fund value, most often an individual will look into the settlement speed factor. Each of the fund transfer methods come with different speed of fund settlement speed. Fund settlement speed indicates the amount of time consumed and the speed at which the funds are settled to the beneficiary's account once it’s been initiated. In most cases, people largely choose one transfer method over the due to the speed factor, however, a faster settlement speed is bound to attract additional charges.
- Charges - In accordance with Reserve Bank of India (RBI), banks decide the transaction charges for each of the fund transfer methods. The charges for purely based on the total value of the fund, settlement speed, and other features/flexibility offered by the bank. Moreover, the government levies an applicable service charge for each fund transfer transaction. Both the originators and the beneficiaries are advised to refer to his/her bank’s website to obtain the latest list of transaction fees and charges applicable for online transfers. By following this practice, both the parties can be aware of the payable fee to the bank and settle the cost accordingly.
- Transaction Limits - As one of the safe banking features and healthy practices, all banking and financial institutions specify transaction limits on most types of banking and financial products. RBI regulates the transaction limits and all other factors of fund transfer through the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS). BPSS is a subcommittee of the Central Board of the RBI and designated for being the highest authority for making policies pertaining to the payment systems in the India. Moreover, BPSS is also responsible for supervising all the payment and settlement systems. All the payment and settlement systems in India are regulated under the Payment and Settlement Systems Act, 2007 (PSS Act).
Though there are various other factors involved in the transfer of funds, these are few of the most basic and important factors which differentiate one transfer method from the other. Since each of the factors has a direct impact on the transfer methods, it makes it easy to understand the differences between the available transfer option.
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Key Differences Between NEFT, RTGS and IMPS
Online transfer methods are subject to availability based on the customer’s eligibility and level of access granted by the bank. Additionally, the limits on fund value, timings, settlement speed, and other factors are a part of the online fund transfer method to provide a positive experience to the customer when they choose one transfer method over the other. Currently, NEFT, RTGS, and IMPS are the most popular methods of fund transfer in India, few of the notable differences between these methods are listed below:
NEFT - The funds transferred under this method are settled in batches (based on Deferred Net Settlement (DNS) and at a specific time of the day. If the transfer is initiative beyond the cut-off time specified by RBI, the funds are typically settled on the next working day. At present, the fund transfer requests under NEFT are processed in twelve batches between 8 a.m. to 7 p.m. on weekdays and six batches between 8 a.m. to 1 p.m. on Saturdays. Unfortunately, NEFT is not available on Sundays and bank holidays. One of the biggest advantages of NEFT is the cost-effectiveness, an individual can carry out smaller value transfers without worrying about the transaction fee and service charges. A smaller fee on the transfer enables the individual to carry out more payments which make NEFT the most popular and extensively used method for online fund transfers.
Under NEFT, the transactions can be initiated and settled from the bank account of one particular bank to another bank’s account throughout India at no additional cost apart from the standard charges, provided both the banks are a part of the NEFT transfer network (NEFT-enabled). Though some banks might have their own policies concerning the NEFT service provided by them, such as restrictions on transferring funds immediately to a newly added beneficiary, fund value limits restricting the value of transfer beyond a specified limit, etc., these protocols are proven to be effective for safeguarding the customer’s financials.
RTGS - This type of transfer methods is applicable and available for fund transfers of a minimum of Rs.2 lakh and there is no upper limit, however, the biggest advantage for RTGS is the fastest/real-time settlement factor. As soon as the transfer instructions are sent, the fund gets settled almost immediately. However, in order to take advantage of the RTGS facility, both the originator's and the beneficiary’s account has to be RTGS-enabled. Even though most banks are a part of the vast and popular RTGS transfer network facilitated by RBI, individuals are recommended to either get in touch with their bank directly or refer to their online banking section to discover their eligibility concerning access to RTGS payment system. The transaction fee under RTGS is higher than the other methods due to the faster settlement speed performed on an instruction by instruction basis.
RTGS comes with limits on the minimum; however, there’s no maximum fund value and it is efficiently used in situations where individuals and businesses require immediate settlement of high-value funds that are well within the specified limits. Efficiency, speed, and reliability factors are few among the many factors that make RTGS as one the most-sought medium of online fund transfers.
IMPS - Also known for being one of the popular and fastest methods of fund transfer, IMPS is used widely across most banks. Unlike other methods of fund transfer that become unavailable on bank holidays and during off working hours, IMPS functions 24/7 allowing a fund transfer at any time of the day. Similar to NEFT, IMPS also allows transfer of low value-funds but what makes it unique is, it immediately settles the funds. NEFT functions as more or less the combined version of NEFT and RTGS, where remitters are neither worried about the size of the fund and service availability nor do they have to be concerned about the settlement speed.
IMPS facility is provided only on the internet and online banking services. Few banks may offer SMS-based IMPS service to mobile banking users. Many of the digital wallets in India utilise IMPS services to credit the money from an individual's wallet to his/her bank account. Though IMPS provides an immediate fund settlement facility, the transaction fees are as low as NEFT.
Things to consider before initiating a fund transfer
- Timings - The timings for each type of fund transfer methods are specific to the bank. Since NEFT and RTGS are largely based on the bank’s hours of operation, depending on the location and specific working hours, the service availability may differ for either of the party involved in the fund transfer.
- GST - GST is applicable on the transaction fee as per the latest norms which are subject to change.
- Transaction fee - A fee is charged for initiating the transfer and not for receiving the funds.
- Transfer network - The remitter needs to check whether the beneficiary's account is eligible to receive funds or not since the bank might not be a part of the transfer network.
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