If you’re a business owner in India who has recently started implementing digital transactions in your business, your knowledge shouldn’t be limited to net banking and card payments. If you’ve heard about NEFT, IMPS, and RTGS, you’d already know that they are used to transfer funds from one account to another. However, are you well-versed in the difference between the 3 modes? This leads to us to the next question: why should you know the difference, anyway?
Let’s say, one fine day, you decide to transfer funds to your vendor’s account. You try wiring the payment through NEFT, but you’re unable to get it done as it’s Sunday. You weren’t familiar with the fixed timing of NEFT, so now you try to get it done through RTGS instead, but that fails as well since your amount is lower than the minimum transaction value.
What you needed in this situation was IMPS, but you had to figure that out through trial and error. Without knowing the difference between the three methods, you had no way of knowing which one would work for you. Let’s fix that. Before you get stuck in another trial-and-error payment mess, read on to understand the three methods and how each one can help you. We’ve done the research so you won’t have to.
NEFT (National Electronic Funds Transfer)
With NEFT, you can transfer any amount to the recipient’s account in a one-on-one transfer basis. NEFT transactions don’t have a maximum limit for funds that can be transferred in a single day.
- Timings for NEFT
One important feature of this method is that the funds are transferred in batches that are settled in hourly time slots. So, depending on the batch in which the funds were transferred, you can expect the recipient to receive the funds within 2 hours of transfer. The fund transfers are processed in 12 batches between 8 a.m. to 7 p.m. on weekdays and 6 batches between 8 a.m. to 1 p.m. on Saturdays. NEFT is not available on Sundays and bank holidays. If a transfer is initiated any time after the specified hours for that day, it will be processed on the next working day.
- Transaction limits and transfer charges
Even individuals without bank accounts can deposit cash through NEFT, but it’s limited to Rs. 50,000 per transaction. The service fee for NEFT transactions varies from Rs. 2.50 to Rs. 25 per transaction (exclusive of tax).
With NEFT, you can initiate transactions to transfer funds from one bank account to another throughout India. However, you must make sure that the banks are a part of the NEFT transfer network (another way to say this is that the banks should be NEFT-enabled).
To transfer funds via NEFT, all you have to do is log in to your net banking portal and add the recipient as a beneficiary. You’ll need to enter details like their name, account number, account type and IFSC code under the Add New Payee section. Once you choose NEFT as the preferred mode of transfer and enter the amount to be transferred, the fund transfer will be completed.
RTGS (Real Time Gross Settlement)
Business owners can use RTGS when they need to transfer large amounts instantly. One advantage that RTGS has over the other methods is the transaction speed, since the entire amount is transferred in real time.
- Timings for RTGS
Though the available hours for RTGS transactions vary based on the individual banks and their branches, this is the standard timing:
- 9:00 a.m. to 4:30 p.m. on Weekdays
- 9:00 a.m. to 2:00 p.m. on Saturdays
- Transaction limits and transfer charges
There’s a minimum limit of Rs. 2 lakhs for RTGS transactions, and there’s no maximum limit as such. The service fee is a bit higher for RTGS transactions: each transaction is charged from Rs. 30 to Rs. 50.
To get an RTGS-enabled account, you can either contact your bank or check your eligibility status in your online banking portal. If you’re using RTGS for a fund transfer, make sure that both you and the recipient have RTGS enabled accounts.
To transfer funds via RTGS, log in to your banking portal and add the recipient as a beneficiary by entering details like their name, account number, account type and IFSC code. Then choose RTGS as the mode of transfer and enter the amount to be transferred, and the fund transfer will be completed.
IMPS (Immediate Payment Service)
IMPS is another real-time payment service, but the distinguishing factor is that IMPS is available 24⁄7 and you can avail the service even on bank holidays. Using IMPS, you can transfer comparatively lower amounts, up to Rs. 2 lakhs, instantly. The service fee for IMPS transactions is pretty low, ranging from Rs. 2.5 to Rs. 15.
A good example of an IMPS transfer is digital wallets — when you use wallets, they implement IMPS to credit the recipient’s account. So, you can think of IMPS as the fund transfer mode that has the best features of both RTGS and NEFT. You can transfer amounts as low as you want, any time you want, with instant results.
Though IMPS services are mostly used online, a few banks offer SMS services. Check with your bank to see if they support IMPS transfers via SMS.
The IMPS service is offered by the National Payments Corporation of India (NPCI). Their services allow customers to transfer funds through both banks and Prepaid Payment Instrument (PPI) issuers. PPIs are instruments that allow you to purchase goods and services or initiate fund transfers using value that is stored in thePPI. Some examples of PPIs include smart cards, magnetic stripe cards, digital wallets, and vouchers. Individuals without bank accounts can transfer funds by IMPS using PPI.
To transfer funds via IMPS, you should first register for the mobile banking service of the concerned bank and generate a Mobile Money Identifier (MMID) and MPIN from the bank. You should make sure that your beneficiary or recipient has the MMID and MPIN too.
Once you’ve registered, log in to your net banking portal and select IMPS as the preferred mode of transfer. Then you should fill in details like the recipient’s mobile number, the recipient’s MMID, the amount to be transferred, and your MPIN. Once this is done, you will receive a confirmation message via SMS.
Factors that differentiate the 3 modes
- Timing: The available hours for each type of fund transfer depend on the individual bank and their customer service schedule. NEFT and RTGS services will be unavailable on weekends and bank holidays, while IMPS services can be availed round the clock. Also, NEFT transfers funds in timed batches, while RTGS and IMPS are real-time transfer modes.
- Transaction limit: This is one of the most important differences. NEFT and IMPS have no minimum value, while RTGS has a minimum fund value of Rs. 2 lakhs. Each mode has a different maximum fund limit.
- Service fee: The fee charged for the fund transfer transaction varies between the three modes. RTGS is comparatively expensive, while NEFT and IMPS are less so.
- Transaction speed: NEFT has fixed batch time slots and can take around 2 hours for the recipient to receive the funds, whereas RTGS and IMPS transfers take place in real time and are usually complete within 30 minutes.
Tip: Before initiating a transfer using any of these modes, read the applicable conditions and rules (if any). Consult your bank in case of queries and verify the details with a bank official to stay on the safer side.
Advantages of using online fund transfer services
Online fund transfers are 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. They also offer choice and flexibility — if you consider factors like the value of funds you want to transfer, transaction speed, cost and timing, you can select the service that suits your needs best for each transaction.
Still having trouble completing vendor payments?
If you’re using Zoho Books, you can carry out B2B payments right from your Zoho Books account as soon as you receive a bill from your vendor. All you have to do is enter the amount to be transferred, the recipient’s name, and account number. Then choose NEFT, RTGS, or IMPS as the preferred transaction type and click Send. It’s simple! You can even track the status of your transaction (processed or in progress) once you’ve initiated the transfer.