While NEFT, IMPS, and RTGS cater to different needs of transactions with respect to urgency, cost, and amount, knowing how they differ can help the user choose the appropriate way of transferring funds according to the need.
In this tech-savvy world, money transfer has become easier and faster with the introduction of technologies such as NEFT, IMPS, and RTGS, each with different advantages targeted to meet diverse needs, be it immediate transfers or cheap transactions for routine payments. The fine lines between these, if understood well, will help the user decide while sending money to enable both speed and reliability for financial transactions.
NEFT is based on a batch processing system, transactions are batched and settled in half-hourly cycles. Though the settlements take place within 2 hours typically, the timelines may differ from one bank to another. There are no minimum and maximum transaction limits imposed by the NEFT system; however, banks may fix their own limits. Most online NEFT transactions are free, while nominal fees are charged in some banks for transactions done through the bank's branch.
IMPS stands for Immediate Payment Service, which has the uniqueness of complete flexibility in making instant fund transfers across weeks and holidays. The money gets credited to the receiver's account the very instant it is initiated and subsequently accepted by the sender's bank. IMPS supports transactions up to ₹2 lakh per transfer; hence, it is suitable for making quick and easy transfers of small amounts. Generally, the transaction fees for IMPS are really minimal; most of the banks charge a maximum of ₹25 per transaction.
RTGS, or Real-Time Gross Settlement, the processing is real-time and gross. That is, the transactions are settled individually and in real time, thus, making fund transfers immediate and irrevocable. Even though there is no maximum limit for transaction values in RTGS, it is essential to have a minimum of ₹2 lakh for a transaction. Obviously, this system will be best fitted in high-value transactions where immediate settlement is of vital importance. One may, therefore, have to pay a considerable amount of charges for transactions through RTGS compared to NEFT and IMPS; it often will be ₹49.50 along with service taxes for transactions above ₹5 lakh.
Wherever necessary—proper choice for effectiveness can be based on the following grounds: For every day and relatively cheap transactions, NEFT offers a reliable option with minimal charges over transactions. IMPS is maximum in its convenience in the case of sudden needs involving lesser amounts, as the process results in instant crediting to the recipients. RTGS makes instant and secure fund transfers at a relatively higher rate for high-value transactions.