Personal Finance

NEFT vs RTGS vs IMPS: Features, benefits of payment systems you should know

Updated : October 31, 2020 11:17 AM IST

National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI).

IMPS is a payment service managed by the National Payments Corporation of India (NPCI).

Electronic or e-transfer of funds refers to the transfer of money from one bank account to another without dealing with bank staff. NEFT or National Electronic Funds Transfer, RTGS, or Real Time Gross Settlement and IMPS or Immediate Payment Service are three such platforms of money transfer available now.

Let's understand these services in detail:

NEFT

National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI).

NEFT offers the following advantages for funds transfer or receipt:

Round the clock availability on all days of the year.
Near-real-time funds transfer to the beneficiary account and settlement in a secure manner.
Pan-India coverage through a large network of branches of all types of banks.
Positive confirmation to the remitter by SMS/e-mail on credit to the beneficiary account.
Penal interest provision for the delay in credit or return of transactions.
No levy of charges by RBI from banks.
No charges to savings bank account customers for online NEFT transactions.
Besides funds transfer, the NEFT system can be used for a variety of transactions including the payment of credit card dues to the card-issuing banks, payment of loan EMI, inward foreign exchange remittances, etc.
Available for one-way funds transfers from India to Nepal.

RTGS

RTGS' stands for Real-Time Gross Settlement, which can be explained as a system where there is a continuous and real-time settlement of fund-transfers, individually on a transaction by transaction basis (without netting).

'Real Time' means the processing of instructions at the time they are received; 'Gross Settlement' means that the settlement of funds transfer instructions occurs individually.

Considering that the funds' settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.

RTGS offers many advantages over the other modes of funds transfer:

It is a safe and secure system for funds transfer.
RTGS transactions/transfers have no amount cap.
The system is available on all days when most bank branches are functioning, including Saturdays.
There is a real-time transfer of funds to the beneficiary account.
The remitter need not use a physical cheque or a demand draft.
The beneficiary need not visit a bank branch for depositing the paper instruments.
The beneficiary need not be apprehensive about loss/theft of physical instruments or the likelihood of fraudulent encashment thereof.
Remitter can initiate the remittances from his / her home/place of work using internet banking if his/her bank offers such a service.
The transaction has legal backing.

IMPS

IMPS is a payment service managed by the National Payments Corporation of India (NPCI). This service enables individuals to make money transfer instantly through banks across the country.

It is available round the clock throughout the year, even on bank holidays.

NEFT vs RTGS vs IMPS: Features, benefits of payment systems you should know

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