All about NEFT, RTGS, IMPS and UPI Payments.

All about NEFT, RTGS, IMPS and UPI Payments.

You must have transferred some money digitally for sure once at least. Then which type of transaction you did? NEFT….?, RTGS….?, IMPS….? UPI….? or something else? Confused….? Let me tell you that these are the major digital payment services in India. If you ever did any digital transaction then quite a chance that it should be one of them. If you already know then you have been understood it but if not then this post is just for you. In this post, I will tell you all about NEFT, RTGS, IMPS and UPI Payments. So let’s get started.

What is the NEFT System?

National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Individuals, firms, and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the system. A bank branch has to be NEFT-enabled for being a part of it.

Even such individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, such cash remittances will be restricted to a maximum of ₹ 50,000/- per transaction. Such customers have to furnish full details including complete address, telephone number, etc. NEFT, thus, facilitates originators or remitters to initiate funds transfer transactions even without having a bank account.

Who can avail of this service?

Individuals, firms or corporates maintaining accounts with a bank branch can receive funds through the NEFT system. It is, therefore, necessary for the beneficiary to have an account with the NEFT enabled destination bank branch in the country. The NEFT system also facilitates a one-way cross-border transfer of funds from India to Nepal. This is known as the Indo-Nepal Remittance Facility Scheme.

Flowchart overview: NEFT

There is no limit either minimum or maximum on the amount of funds. However, the maximum amount per transaction is limited to ₹ 50,000/- for cash-based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme.

Note: NEFT system works from 8 am to 7 pm on all working days of the week (Except 2nd and 4th Saturday of the month).

What is RTGS System?

Real Time Gross Settlement (RTGS), can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). “Real Time” means the processing of instructions at the time they are received rather than at some later time; “Gross Settlement” means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the fund’s settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.

How is RTGS different from NEFT?

NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis which settles transactions in batches. These transactions are netted (payable and receivables) in NEFT whereas in RTGS the transactions are settled individually.

The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹ 2,00,000/-. There is no upper limit for RTGS transactions.

Flowchart overview: RTGS

The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank. Based on this the remitting bank can advise the remitting customer through SMS that money has been credited to the receiving bank.

Note: A very nominal service charges levied by the banks for offering funds transfer through RTGS & NEFT system.

What is IMPS?

Immediate Payment Service (IMPS) public launch happened on 22nd November 2010 by Smt. Shyamala Gopinath, DG RBI at Mumbai and this service is now available to the Indian public. IMPS provides robust and real-time fund transfer which offers an instant, 24X7, interbank electronic fund transfer service that could be accessed on multiple channels like mobile, internet, ATM, SMS, bank branch and USSD(*99#).

IMPS is an emphatic service which allows transferring of funds instantly within banks across India which is not only safe but also economical.

IMPS Logo

This facility is provided by NPCI through its existing NFS switch. The eligible criteria for the Banks who can participate in IMPS are that the entity should have valid banking or prepaid payment instrument license from Reserve Bank of India to participate in IMPS.

Objectives of IMPS

  • To enable bank customers to use mobile as a channel for accessing their banks’ accounts and remit funds.
  • Making payment simpler just with the mobile number of the beneficiary.
  • To serve the goal of RBI in electronification of retail payments.
  • To facilitate mobile payment systems.

The participants for IMPS will be as follows:

  1. Remitter (Sender)
  2. Beneficiary (Receiver)
  3. Banks
  4. National Financial Switch (NPCI)

How to register for IMPS?

Register yourself with the mobile banking service of the bank as follows:

  • Get Mobile Money Identifier (MMID) and MPIN from the bank.
  • Download Software (Application) for mobile banking (ensure the compatibility of mobile with the application) or use the SMS facility in your mobile if your bank provides IMPS on SMS.

What is UPI Payment system?

This facility is also provided by NPCI through its existing NFS switch under “Digital India” campaign. Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.

NPCI Logo

It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience. Each Bank provides its own UPI App for Android, Windows and iOS mobile platform(s). It is the most popular payment service among them as of now.

It is also providing different types of offers in the form of cash backs, coupons, gift vouchers and many other offers for the users to use this service more frequently and promote paperless or cashless transactions under “Digital India” campaign. Most important thing is, this service is free as of now means no service charge is levied by the banks due to the promotion of “Digital India” campaign.

IMPS logo

Note: There is no limit either minimum or maximum on the amount of funds. However, the maximum amount per transaction is limited to ₹ 1,00,000/-.

How to avail this service?

You need a bank a/c, a mobile number (should be linked with the bank a/c), a smartphone with internet facility, debit card for re-setting MPIN.

How to activate UPI Service?

  • Download the app for UPI of your respective bank. You can also use BHIM UPI App.
  • Do registration on the App with a/c details
  • Create a virtual ID
  • Set MPIN

How to create Virtual ID (VPA)

So that’s it for today guys. I hope you would have enjoyed it. If you have any suggestions and queries related to the post, let me know in the comment section below. Please do share this post to your circle to explore the knowledge you must know.

Thank you.

Anil Kashyap

I want to explore new things every single moment of life. Life motto: Learn and teach as much as you can until your last breath.

Want to say something

CLOSE MENU
%d bloggers like this: