Understanding IMPS, NEFT, and other payment methods

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With the increasing number of users with net banking and mobile banking for transactions and for bill payments, the physical banking has been reduced to a great extent. Amid this improvisation of the technology in the banking sector, a few payment methods have sprung up for assisting users on various kind of transactions. So what are these type of payments?

IMPS

IMPS is the acronym of Immediate Payment Services. This payment method allows the user to transfer the amount immediately. This method is widely used via mobile banking. IMPS is a 24 X 7 transfer facility. The transfer might be immediate but in the background, the banks still settle at the end of the day as the settlement risk is reduced by limiting the value of the transaction. The fund clearing/settlement is the responsibility of NPCI.

NEFT

NEFT is the acronym of National Electronic Fund Transfer and it is an improvised version of SEFT (Special Electronics Funds Transfer). NEFT was first introduced in December 2005. In this process, the funds are transferred in batches from one bank account to another. When an individual transfers money from one account to his friend/relative it is not immediately credited but done after in the next settlement cycle which occurs at 60 minutes intervals. In this case, NEFT the fund clearing/settlement is the responsibility of NEFT Clearing Centre (operated by National Clearing Cell, Reserve Bank of India, Mumbai). NEFT is available only on the days that banks operate for the public.

RGTS

RTGS happens in real time and gross basis and is meant for high-value transactions, minimum Rs.2 lakh. The transfer usually happens within 30 minutes from the time of initiation depending on the service window of RTGS. The service windows for RTGS at banks are processed continuously throughout RTGS business hours—8 am to 8 pm on weekdays and 8:00 am to 3:30 pm on Saturdays.

With increasing demand for online transactions, banks are coming up with various new methods for smooth transactions.