Posted on Mar 24, 2025
Vikas Chandra Das
Financial Content Expert & Brand Storyteller
IMPS vs NEFT: Which Payment Method is Better?
In today's banking landscape, there's a rush of instant money transfers, far away from the times when people used to visit bank branches to submit a cheque and wait for a couple of days before the process would be completed. Now, it's all fast and convenient, much to people's delight. We all live busy, and there's a deadline for everything including even payments. The two fastest payment modes in India's banking landscape are Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT).
However, people tend to interchange these terms for payment services and somewhat fail to fulfil their objectives.
While the IMPS is the faster of the two, it has limits i.e. INR 5 lakh per transaction. The money is credited instantly whether you do it on workdays or weekends.
NEFT, on the other hand, comes with no limits. However, the payment is not instant. There are many settlement cycles (half-hourly basis) within a day as per the RBI guidelines. The credit time depends on the time when you transact. So, if you transact within one cycle, the money will be credited during the next cycle. The cycles operate 24x7, however, when done through the bank branch, there are specific timings, which usually range from 7 a.m. to 7 p.m. every working day.
There are pros and cons to each of the two. In this blog, we will define both and explain their differences so that you can make an informed call on payment.
What are IMPS and NEFT Payment Systems?
Full Forms and Definitions
Immediate Payment Service (IMPS) - This service allows you to transfer money instantly from one bank account to another using your mobile phone or net banking. IMPS transactions are backed by the National Payments Corporation of India (NPCI).
National Electronic Funds Transfer (NEFT) - This service allows you to transfer money from one bank account to another using your mobile number, net banking, or even at the bank branch. The RBI oversees NEFT transactions made across India.
Advantages and Disadvantages of NEFT and IMPS
Advantages of IMPS
Real-time Fund Transfer - The best part about IMPS transactions is speed. Fund transfers remain instant, the fastest way of transferring money. So, if your family or friends need money instantly, you can consider initiating IMPS transactions.
Accessible Anytime, Anywhere - You can make instant fund transfers using the IMPS facility anytime and from anywhere.
Simple Process - This is one of the best fund transfer modes because the process is simple. You need to add the beneficiary account first by carefully mentioning their account number and IFSC Code. Post that, you will need to wait for nearly 30 minutes. Once the beneficiary is added, you can make fund transfers.
Best Option for Urgent Transactions - IMPS is one of the best fund transfer methods, especially for those seeking instant transactions.
Disadvantages of IMPS
Transfer Limits - Transfer limits apply to online transactions through IMPS. The limits placed are up to INR 5 lakh per transaction.
Higher Charges - IMPS transactions attract higher charges based on the bank's guidelines. The charges, which are based on the transaction amount, can go up to as high as INR 25 per transaction.
Advantages of NEFT
No Transaction Limit - NEFT transactions have no upper limits, allowing individuals the flexibility they seek in a payment system.
Reliable for Non-urgent Payments - Using NEFT is best when you don't need to make payments instantly. You can make small to large-volume transactions without any charges if done through net banking or mobile banking channels.
No Charges for Online Transactions - Online NEFT transactions don't carry any charges, so you can transfer funds without any worries about costs. When initiated through the bank branch, the charge will be applied but at a lower rate compared to IMPS.
Disadvantages of NEFT
Longer Transaction Processing Time - NEFT transactions are settled across batches and not instantly. So, if you want instant transactions, NEFT is not for you. There are numerous half-hourly batches on which these transactions are processed and credited after verifications by the Reserve Bank of India (RBI). Usually, NEFT transactions initiated during a particular settlement batch are credited during the batch that comes next.
Limited Operational Hours - This is not the case with online NEFT transactions though. However, when making these transactions through a bank branch, you need to contend with limited operational hours. Depending on the bank, the operational hours for NEFT transactions can be between 7 a.m. to 7 p.m. Also, bank branches remain closed on public holidays and 2nd and fourth Saturday of the month. So, there will be a wait time.
Which is Faster - IMPS or NEFT?
As far as the pace of transaction processing is concerned, IMPS scores more points than NEFT. IMPS transactions are credited instantly. No matter the time or day, you will get instant transfers of up to INR 5 lakh per transaction using the IMPS facility. So, in case of emergencies where you can't wait, the IMPS transaction would serve you the best. But bear in mind the transaction limit with IMPS.
The process starts with adding a beneficiary online. You need to enter the beneficiary's name, account number, IFSC Code and request for activation. All the details will be verified before the beneficiary activation is allowed. The verification process can take around 30 minutes. Once the verification process becomes successful, the beneficiary account will be added.
NEFT transactions, on the other hand, have a longer processing time. In fact, they go through five stages - Initiation, Batch Processing, Batch Submission, RBI Processing, and Confirmation.
Initiation - The first step is the transaction you initiate through NEFT using online banking or at a bank branch. The initiation process requires adding a beneficiary to whom you intend to make an NEFT fund transfer. The beneficiary addition requires adding the individual's name, account number and IFSC Code. When doing this from the bank branch, you need to enter beneficiary details in the NEFT application form.
Batch Processing - NEFT settlements operate in half-hourly batches across days. From the time of initiation, it takes around 30 minutes for your NEFT transactions to be included in the next available batch.
Batch Submission - The bank submits the NEFT batch, along with the ones of different customers, to the Reserve Bank of India.
RBI Processing - The RBI verifies the NEFT batch details, such as the beneficiary's name, account number and IFSC Code. Upon successful verification, the RBI transfers funds from the sender account to the beneficiary account.
Confirmation - Upon successful NEFT fund transfer, both the sender and beneficiary receive a confirmation message or email from their respective banks.
Note - You don't need to follow the same addition process again for the same beneficiary unless you have deleted it. It applies to both IMPS and NEFT transactions.
When to Choose NEFT and IMPS?
It all depends on the transaction type and amount. If the transaction is below INR 5 lakh and you need to transfer it instantly, choose the IMPS facility. For example, if today is the last date of your kids' admission to college, you can't afford any delays. Use the IMPS fund transfer facility to pay off the fee and prevent the undue hassles that people experience otherwise.
However, if the receiver can wait for some time, using the NEFT mode of fund transfer makes sense. With this, you can not only pay comfortably but also remain free from charges provided you are doing it online. For example, to pay your house rent to the landlord, you can use NEFT. The payment will be credited to your landlord's bank account in a few hours.
Conclusion
Both NEFT and IMPS fund transfers have their own merits and demerits. It's all about your financial needs and which of the two suits you the most at a given point of time. Immediate transfer needs can be met efficiently by IMPS, subject to the limit of INR 5 lakh per transaction. Based on the bank's norms, you will need to pay the transaction fees for such urgent transfers. Banks do deduct a nominal fee for IMPS transfers. However, for large value transactions that are not urgently required, consider using the NEFT facility. The service availability for NEFT is now extended to 24x7 from 2020 onward.
Frequently Asked Questions
What are the Charges for IMPS and NEFT?
IMPS transaction fees can be around INR 2-15 plus 18% GST. Whereas NEFT transactions initiated through bank branches and not online will attract charges. NEFT fees can be around INR 2-25 + 18% GST. The exact fee amount depends on the bank's norms in both NEFT and IMPS.
Can I Transfer Internationally Using IMPS or NEFT?
International transactions via IMPS are not allowed, while NEFT transactions outside of India are allowed for Nepal only.
Are IMPS and NEFT Secure?
Yes, IMPS and NEFT are secure and are under the supervision of NPCI and RBI, respectively.
