When it comes to sending money from one bank account to another, most people in India have heard the names NEFT, RTGS, and IMPS. These are the three primary electronic fund transfer systems that enable you to transfer money safely and quickly.
But many times, people get confused. They wonder:
- What exactly is NEFT?
- How is RTGS different from NEFT?
- Why do people use IMPS for urgent transfers
- Which one should I use for business payouts or personal transfers?
So, in this complete guide, we will explain everything about NEFT, RTGS, and IMPS. We will also compare them, look at charges, timings, and benefits, and help you understand which method suits you best.
NEFT stands for National Electronic Funds Transfer. It is an electronic method to transfer money between bank accounts across India. NEFT works on a batch settlement process, which means transactions are processed in groups at regular intervals.
Over the years, NEFT has been modernized and now operates 24/7, making it highly convenient for most transfers.
How NEFT Works ?
- You add a beneficiary and provide account details and the IFSC code.
- You initiate the transfer through internet banking, mobile banking, or by visiting a branch.
- The bank sends the transaction to the NEFT settlement system, where it waits for the next batch to be processed.
After the batch clears, the beneficiary bank receives the funds and credits the recipient account.
When to use NEFT
NEFT is best for routine or medium-value transfers like paying rent, utility bills, or sending money to family. It is safe and widely accepted by all banks in India. Many merchants and service providers accept NEFT for payments where a clear bank-to-bank trail is needed.
Features of NEFT
- No minimum transfer amount (you can send even ₹1).
- The maximum limit depends on your bank, but usually it is ₹10–20 lakhs.
- Safe and reliable, as it is regulated by the Reserve Bank of India (RBI).
What is RTGS?
RTGS means Real-Time Gross Settlement. It is designed for high-value, urgent transfers. The word “real-time” means the transaction is processed instantly, and “gross settlement” means each transaction is settled individually, not in batches. This ensures the moment-to-moment settlement and lowers settlement risk.
How RTGS Works?
- A sender initiates a large-value transaction, enters beneficiary details, and confirms.
- The transfer is processed as soon as banks verify the details.
- Funds move in real time and the beneficiary account is credited immediately.
When to use RTGS
RTGS is used for high-value transactions, typically when the amount is ₹2 lakh or more. Businesses, companies, and individuals buying or selling property often use RTGS for secure and instant settlement. For corporate payouts or vendor settlements that require immediate confirmation, RTGS is the preferred option.
Features of RTGS
- Minimum transfer amount: ₹2 lakhs.
- No maximum limit (subject to bank rules).
- Very fast and secure, suitable for large business payments.
- Available 24×7, including weekends and holidays.
What is IMPS?
IMPS stands for Immediate Payment Service. It provides instant, 24/7 bank-to-bank transfers through mobile banking, internet banking, and other channels. IMPS is very useful for quick, small-value payments and emergencies. It was built to provide real-time transfers at any hour with minimum fuss.
How IMPS Works?
- You can transfer money using the recipient’s account number and IFSC code, or using their mobile number and MMID in some banks, or using UPI identifiers where supported.
- The transfer happens in seconds, and both sender and receiver get immediate confirmation.
- IMPS works well on mobile apps, and many payment gateway and fintech apps also use IMPS rails to process instant payouts
When to use IMPS?
Use IMPS for quick payments like paying for medicines, booking a taxi, or sending urgent money to friends and family. It is also commonly used for payouts by small businesses and for refund processing, where speed matters.
Features of IMPS
- No minimum limit (you can transfer even ₹1).
- The maximum limit is usually ₹5 lakhs (varies by bank).
- Useful for emergencies, like paying medical bills late at night.
NEFT vs RTGS vs IMPS: A quick comparison
Availability
All three are available 24×7 in modern banking setups, but historically, NEFT used to run in batches. Today, NEFT also runs round the clock.
Speed
RTGS and IMPS are immediate; NEFT is fast but may take a little longer as it originally used batch processing.
Minimum and Maximum Limits
NEFT has no minimum but banks may have their own maximum limits. RTGS typically has a minimum of ₹2 lakh. IMPS usually has a lower maximum limit (often ₹5 lakh, subject to bank rules).
Best use case
Use NEFT for routine work, RTGS for large-value instant transfers, and IMPS for instant small-value transfers.
Charges and fees
Banks may charge a small fee for NEFT, RTGS, and IMPS transactions. However, many banks and most UPI apps do not charge customers any fees. Typical fee ranges are:
- NEFT: nominal fees, often waived by many banks for online transfers.
- RTGS: slightly higher than NEFT, charged on high-value transfers.
- IMPS: low charges for small transfers, often waived for low-value payments or for UPI.
Always check your bank’s fee schedule before initiating a transaction. For merchants using payment gateway services, transaction costs and payout cycles matter, and these may affect how they choose to move funds from the payment gateway to their bank account. Payment links and payment buttons can collect customer money, while NEFT/RTGS/IMPS are used later to settle or disburse funds.
How to do a transfer: step-by-step
Using mobile or internet banking
- Log in to your bank’s app or net banking portal.
- Go to ‘Fund Transfer’ or ‘Payments’.
- Choose NEFT, RTGS, or IMPS based on the amount and urgency.
- Add beneficiary details (account number, name, IFSC code).
- Enter the amount and description or remarks.
- Confirm using OTP or transaction PIN.
- Save or note the transaction reference number.
Using a bank branch
- Fill a transfer form providing beneficiary details.
- Submit the form to the teller along with ID proof if required.
- The bank processes it and gives you a receipt with a reference number.
Modern users prefer mobile banking and UPI apps, but branch transfers are still available if you need help from bank staff.
Role in business payments and payouts
Businesses use NEFT, RTGS, and IMPS for different purposes. For example:
- Payroll payouts: Companies may use NEFT for regular salary payments in bulk or use dedicated payroll solutions integrated with bank APIs.
- Vendor payments: For larger vendor settlements, businesses may prefer RTGS to ensure immediate credit and proof of payment.
- Refunds and small payouts: IMPS or UPI transfers are preferred where speed matters, such as returning a customer’s money after a chargeback or cancelling an order.
Fintech companies and payment gateways often combine these services so that merchants receive payouts on a schedule, and refunds or chargebacks are handled quickly without manual bank intervention. This makes reconciliation and GST compliance easier for businesses.
Advantages of NEFT, RTGS, and IMPS
Every payment system has its own set of benefits. Understanding these advantages will help you decide which method suits your personal or business needs.
NEFT Advantages
NEFT is the most widely used mode of bank transfer in India, and for good reason:
Simple and Safe
It is easy to use and backed by the RBI, which makes it a trusted option for millions of people.
Good for Small Payments
You can transfer as little as ₹1, making it perfect for regular expenses like rent, bills, EMIs, or school fees.
Works Across All Banks
Almost every bank in India supports NEFT, so you can transfer money without worrying about whether the other person’s bank is compatible.
Available 24x7
With the RBI’s digital push, NEFT now works round the clock, including Sundays and holidays.
Low or Zero Charges
Most banks offer NEFT for free for online transactions, making it cost-effective for frequent transfers.
Example: If you are paying your monthly electricity bill of ₹2,500, NEFT is a reliable and safe option.
RTGS Advantages
RTGS is the go-to option for large and urgent transfers, especially for businesses. Its key advantages include:
Instant Settlement
Money is credited in real time, which means the recipient gets the funds immediately.
No Upper Limit
There’s no maximum cap, so you can transfer crores if needed.
Best for High-Value Deals
Ideal for corporate transactions, vendor payments, and property purchases where quick confirmation is essential.
Safe and Traceable
RTGS provides a clear audit trail, which is useful for businesses during GST filing or financial audits.
24/7 Availability
Unlike the old days when RTGS worked only during banking hours, it is now available all day, every day.
Example: If a company has to pay ₹5 lakh to a supplier for raw materials, RTGS ensures the money reaches instantly without waiting.
IMPS Advantages
IMPS is designed for speed and convenience, making it the most user-friendly option for day-to-day needs. Its main benefits are:
Super Fast
Transfers happen in seconds, making it perfect for emergencies.
Works Anytime, Anywhere
Whether it’s midnight, a bank holiday, or even while travelling, IMPS is always available.
Perfect for Emergencies:
When you need to send money urgently, IMPS ensures instant credit.
Mobile-Friendly
Works seamlessly with mobile banking apps, internet banking, and even UPI platforms.
Low Minimum Requirement
You can transfer as little as ₹1, and banks allow up to ₹5 lakh in most cases.
Example: If your friend needs ₹1,000 late at night for booking a last-minute train ticket, IMPS is the fastest and most convenient way to help.
Practical examples and scenarios
Example 1: Paying rent
If you pay a monthly rent of ₹20,000, NEFT or IMPS would work well. If you use NEFT and the bank settles quickly, the landlord gets the money in a few hours. If it is urgent or outside banking hours, use IMPS so the landlord receives the money instantly.
Example 2: Buying property
For a down payment of ₹10 lakh, RTGS is preferable because it provides instant, high-value settlement and clear transaction records.
Example 3: Emergency help
If a family member needs urgent medical help at night, IMPS or UPI is the best option for immediate transfer.
Example 4: Merchant refunds and chargebacks
If a customer requests a refund after a payment gateway has processed a transaction, the merchant may process the refund through NEFT or IMPS, depending on the amount and speed required. For chargebacks, documentation and bank/payout rules decide which method is used.
Things to watch out for
1. Wrong account number
If you enter a wrong account number but correct IFSC, banks can reverse only if the receiving bank agrees. It can be a long process.
2. Phishing and fraud
Beware of fake payment links and scam messages. Always use official bank apps or trusted UPI apps.
3. Limits
Banks may have daily limits for IMPS or UPI. For large transfers, RTGS is often the only option.
4. Documentation
For business transactions, keep receipts and transaction IDs as proof of payment for accounting and tax purposes.
How RBI and Banks Regulate These Systems?
The Reserve Bank of India (RBI) sets the rules and security standards for NEFT, RTGS, and IMPS.
Banks follow these guidelines and add extra layers like two-factor authentication and beneficiary cooling periods to avoid fraud.
This framework ensures transfers are traceable and auditable for legal and tax records.
Tips for smooth transfers
- Save frequently used beneficiary details to avoid mistakes.
- Use beneficiary nicknames for easy identification in apps.
- Enable alerts for all transactions to stay informed about when money is debited or credited.
- Link your bank account to a trusted payment gateway for easier merchant payouts and reconciliation.
Failed or Reversed Transfers: What to Do
- Failed transfers are usually automatically reversed and the money returns to your account.
- Wrong-account transfers require a reversal request; banks contact the receiving bank and may need recipient consent.
- For suspected fraud or unauthorized transfers, contact your bank immediately with the transaction ID, date, and time.
Quick action increases the chance of recovery, though success depends on cooperation between banks.
Integrating Bank Transfers with Fintech and Gateways
Fintech and payment gateway platforms integrate with bank APIs to automate payouts, process refunds, and manage payouts to vendors or delivery partners.
Using APIs and scheduled payouts, businesses can reduce manual work and improve cash flow management. Payment links and QR code payments bring customers in, while NEFT/RTGS/IMPS help settle larger sums and reconcile accounts.
Conclusion
Whether you are an individual paying bills, a small business sending payouts, or a fintech company building payment solutions, knowing the difference between NEFT, RTGS, and IMPS helps you choose the right method.
Money transfer is no longer a headache in India – with these systems, it is fast, safe, and available 24/7.
Frequently Asked Questions (FAQ)
Q: How long does NEFT take now?
NEFT is now 24×7 and usually takes minutes to a few hours, depending on bank processing.
Q: Can businesses automate payouts?
Yes. Payment gateways and bank APIs allow scheduled NEFT/RTGS/IMPS payouts.
Q: Are transaction records available for audits?
Yes. Every transfer has a reference number and appears on bank statements for GST and accounting.
Q: Is IMPS faster than NEFT?
Yes. IMPS is immediate — transactions happen in seconds. NEFT is also fast now, but sometimes it may take a few minutes depending on bank’s settlement.
Q: Can I use IMPS for business payments?
Yes, small businesses and merchants can use IMPS for instant payments, small vendor transfers, and emergency payouts.