Is NEFT possible on public holidays

NEFT and IMPS Payment Methods - What Are They And How Are They Different?

NEFT and IMPS Payment Methods - What Are They And How Are They Different?

NEFT and IMPS are two of the most popular electronic payment methods used by people in India. Both payment systems are available at all leading banking organizations such as State Bank of India, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, etc. For tech savvy and forward thinking individuals in India, these payment methods come in like a blessing You can of course ask, "What are the benefits of these payment methods?" Good question! Let's find out.

Benefits of NEFT and IMPS payment methods

  • Both of the above methods are digital methods of transferring funds. Therefore, anyone with access to a computer or laptop and an internet connection can send or receive money without manually visiting a bank.
  • Most banks have their mobile banking apps available for both Android and iOS devices. These mobile banking apps have NEFT and IMPS transfer functions. Anyone with a smartphone with an internet connection can transfer or receive money, even if they are commuting. Therefore, today's banking no longer restricts mobility.
  • Today nobody has to manually go to a bank, stand in line, fill out long forms to send or receive money. You can do banking from home.
  • Both payment methods are fast. IMPS is faster with instance transfer, while NEFT allows transfers within a few minutes to a few hours.
  • The above two methods are electronic and therefore save a lot of paper by eliminating the paperwork. All documentation is digital. Of course they are environmentally friendly.

We can write more benefits if we look at each payment system individually. However, this article is not about their benefits; We will go on to understand what these two payment methods mean and how they work.

Ready?

NEFT Payments - What and How?

NEFT is an acronym for National Electronic Fund Transfer. A person, legal entity, or company can transfer money to a beneficiary in this way. With NEFT transfers, the payments reach the beneficiary's account within a few minutes. However, depending on the transmission time and the holiday, it can take a few hours to a few days. The NEFT payment system never allows a large amount of money to be transferred to a beneficiary. Each bank has an upper limit for a single transaction. The upper limit can vary from bank to bank. For example, SBI has a maximum limit of INR 2 lakhs for one-time NEFT transmission. If you want to transfer more, you will need to make several such transactions.

On the other hand, there is no minimum limit. You can send any amount you want. For example, if you only want to send INR 1, you can.

NEFT payment processing takes place in batches

NEFT transfers are made in batches. Put simply, banks will not process such transactions when they come. They have specific times during the day when they process these transfers for approval.

Typically, banks start processing NEFT transfers at 9 AM in the morning and stop at 7 PM. Some banks start early. For example, SBI starts processing at 8 AM.

Banks typically process NEFT payments once an hour. So if the first batch is processed at 9 AM, the next batch will have to wait until 10 AM. SBI, on the other hand, has a half-hour processing cycle. The processing frequency differs from bank to bank.

The timing for processing is strict

Banks are very strict about turnaround times. For example, if you initiate a NEFT broadcast at 9:01 AM, the broadcast will be put on the second queue and will have to wait until 10 AM when the bank begins processing the second batch. Likewise, if you initiate a transfer at 7:01 PM, the bank won't process the payment until the next morning.

Saturdays and Sundays

NEFT transfers are processed by banks on Saturdays, but only from 8/9 AM to 1 PM. Processing is still carried out in batches. There is no NEFT transfer on Sundays.

National / State Holidays and Bank Holidays

There are no NEFT transactions on public holidays. Why? Easy! Bank employees are on vacation! It is even more important that the RBI servers are not operated on public holidays.

Where does the RBI server in NEFT come from? - How does NEFT work?

Yes, you just asked a brilliant question and we're glad you did! Here's how NEFT works.

See the picture below. It describes the chain of events that occur when you initiate a NEFT transmission.

Do you now understand the role of the Reserve Bank of India? Yes, NEFT payments are not possible without an RBI server. So if RBI is not open, NEFT transactions will stop.

IMPS Payments - What and How?

IMPS is also an acronym like NEFT. IMPS stands for Instant Mobile Payment Service. There are two keywords that you must not ignore. Can you identify these words Let us help you:

With this form of money transfer option, you can transfer money to anyone using your mobile phone and the recipient or the person receiving the money will have the money in their account instantly.

So the transfer is almost instantaneous. There is no waiting time, no batch processing - nothing! The problem is, IMPS settlements are irreversible. Irrevocable means that the bank is no longer authorized to withdraw the payment after the payment. If the money arrives in another account (not the intended person's account), the bank will not be able to claim the money back and you will not be able to repay you. You have to absorb the loss.

IMPS is an interbank money transfer. Put simply, you can transfer money from a bank account to an account at a completely different bank (even NEFT is an interbank remittance facility for clarity).

How does the IMPS system work?

IMPS had two versions:

  • Customer-to-customer payment
  • Dealer payment

Customer-to-customer payment

This method allows funds to move from one person to another. The recipient and the sender must register with their respective banks for mobile banking. Once they register, their banks offer two things:

  • MMID: Mobile Money Identifier
  • MPIN: Mobile Banking Personal Identification Number

For example, suppose customer A wants to send money to customer B. In such a case, customer A must provide the following information:

  • Cell phone number of customer B
  • MMID of customer B
  • MPIN of customer A
  • Transfer amount that goes to customer B.

The question is where to enter this information. There are two possibilities:

  • Through the bank's mobile banking application (e.g. SBI Buddy or iMobile, etc.).
  • Via SMS (if the bank supports mobile banking via SMS).

The sender or the ordering party (financial jargon) must have:

  • A mobile phone with a mobile banking app or SMS function.
  • MMID of the recipient or beneficiary (financial jargon).
  • Cell phone number of the beneficiary.

As soon as the sender fills in the required information and clicks the "Send" button, they will receive an SMS confirmation of the payment. The recipient or recipient, on the other hand, also receives an SMS that he has received money.

Things to remember
  • MMID is always linked to a unique mobile phone number. A MMID cannot establish a connection with two cell phone numbers.
  • Several MMIDs can be linked to a single mobile phone number. For example, a person can have two accounts in two different banks, but they can use the same cell phone number. If this person activates mobile banking for both banks, two MMIDs are linked to a single mobile phone number.
What happened if?

What if the beneficiary has not registered for mobile banking? Does IMPS work?

Yes it will. In this case, the sender must use their mobile banking app (or SMS banking) and enter the beneficiary's name, beneficiary's account number, IFSC, and transfer amount, and press the Send button. Even in this case, the money will immediately switch from the recipient's account to the recipient's account.

Dealer payment

This system was once there, but not enough traction was achieved. NCPI or National Payments Corporation of India have discontinued this option as of May 1, 2017. You can find the newsletter here. Since it is no longer used, let's skip the details.

Differences between NEFT and IMPS

Are you wondering how NEFT is different from IMPS? The answer to your question can be found in the following table:

Point of differenceNEFTIMPS
Immediate transferNo - The transfer can take a few minutes to a few hours or days.Immediate transmission No waiting.
serverReserve Bank of India servers.Bank ATM servers.
24 × 7No - Transfers between working days are allowed between certain periods of time. Usually between 9 AM and 7 PM. For Saturday the time frame is between 9 AM and 1 PM24 × 7 transfer function available due to ATM servers.
365 daysNo - transfers can only be made on working days. There is no broadcast on public holidays, state or national holidays, and Sundays.Transfers take place 365 days a year.
Batch processingYes - transfers are processed in batches.No - the transfer takes place individually. In other words, every transfer takes place as soon as the transfer request comes.
platformNet Banking Platform, Mobile Banking Platform, directly from the bank (manual submission of the NEFT transfer form).Mobile banking app, SMS, net banking platform, ATM, branch and USSD (with the code * 99 #).

source

Immediate payment service catalog