Payment Methods

We have various online and offline payment methods available to us. Post demonetization, the online payment methods saw more usage than any other. In this post we'll be covering the four major methods to transfer money online namely Immediate Payment Service (IMPS), Unified Payments Interface (UPI), RTGS and NEFT.

1. Immediate Payment Services (IMPS)

As the name suggests, this is an immediate method of funds transfer. You can use this method anytime round the clock, even during bank holidays. One should note that using this method you can transfer money upto ₹2 lakhs only.

How to use this method?

There are two main ways to use this method, one is through mobile banking and the other is through net banking. Both ways have slightly different requirements.

Mobile Banking

To transfer funds (using IMPS) through mobile banking you'll first need to register for mobile banking services of your bank. Your bank will then provide you with two main things, MPIN and a MMID (Mobile Money Identifier.)

Now you can transfer money either through your banks mobile app or through SMS facility.

• Mobile App (online)
• To transfer money using mobile app, first, download your bank's mobile app.
• Generally, under the menu section, you'll find a "Funds Transfer" option. Click on that and choose IMPS.
• You'll need to enter the receiver's (beneficiary's) mobile number and MMID, followed by the amount you want to transfer (use the SMS format of your bank.)
• You'll receive a confirmation message where you'll have to enter your MPIN and voila, the money is transferred instantaneously.
• SMS (offline)
• It is very similar to the mobile app method. You'll need to compose a text message using the format provided by your bank (using proper keywords.)
• Fill in the receiver's mobile number, MMID and the amount you want to transfer and hit send.
• You'll receive a confirmation message asking you for your MPIN. Enter it, hit send and the money will be transferred.

Net Banking (online)

The general flow of transferring money via net banking is similar to the mobile banking method. The net banking process is a bit more lengthy and requires more details of the recipient which makes it a little inconvenient.

• Registration of receiver
• You'll need to login to your online banking portal.
• Add an IMPS beneficiary (recipient.) For this you'll need the recipients account number, account type, bank IFSC code, the account name and some additional details.
• Transferring money
• Once the recipient is added to your beneficiary list, go to "Funds Transfer" tab, select the recipient from the beneficiary list, enter the amount you want to transfer and hit send.
• Your money is transferred instantaneously and you'll receive a confirmation message.

2. Unified Payments Interface (UPI)

This online payment method is widely used by the young generation nowadays through apps like Google Pay, PayTM, PhonePe, etc. This is another real-time payment method i.e. the money is transferred instantly. It is very similar to IMPS.

What is the difference between UPI and IMPS?

The main difference between UPI and IMPS lies in the amount of details (of the receiver) required.

1. For IMPS, depending upon whether you're using it through mobile banking or net banking, you require the receivers phone number and MMID or the account number, IFSC code and other hard to remember details of the receiver.
2. With UPI, all one needs to know is the Virtual Payment Address (VPA) of the receiver and a UPI pin which the user can set as per their choice.
3. Money transfer using UPI has maximum limit of ₹1 lakh only while the maximum limit for IMPS is ₹2 lakhs.

How to use this method?

• Register yourself on a UPI app
• To transfer money using UPI, you need to download one of the apps mentioned above or your bank's app which supports the UPI method.
• The app will prompt you to set a VPA of your choice. The VPA needs to be unique.
• Connect the VPA to your bank account.
• The app will send you an OTP on the mobile number registered with your bank account for authentication.
• Once the authentication is done, you'll have to set a UPI pin of your choice.
• Transferring money
• To transfer money to someone, enter their UPI ID and the amount to be transfered. Enter your UPI pin to confirm the transaction and the money will be transfered.

3. NEFT

NEFT stands for National Electronic Fund Transfer. This method allows you to transfer money from your bank account to any other bank account in India, provided that both banks have NEFT facilities.

What differentiates NEFT?

1. NEFT transfers are not immediate. These transfers are usually made in half-hourly batches by the banks.
2. This mode of transfer is available only during bank working days from 8:00 am to 7:00 pm (timings may differ slightly depending on the bank.)
3. This mode of transfer has an upper limit of ₹10 lakh per transaction (online) and a limit of ₹50,000 per cash transaction (offline) but there is no limit to the number of transfers made in a day.

How to use this method?

• Registration of beneficiary (if new) in your account. You need to do this only once if the beneficiary is new.
• Login to your online banking portal.
• Add beneficiary (receiver) details such as account number, account type, IFSC code and other required details in the "manage beneficiary/ receiver/ payee" tab.
• The bank will send you an OTP to authorize the added beneficiary. Enter the same when prompted and the beneficiary will be added.
• Transferring money
• Select NEFT under the "Fund Transfer" tab and select the beneficiary to whom you want to transfer the money.
• Enter the amount to be transferred and hit transfer. You'll receive an OTP on your registered mobile number for confirmation. 
• Upon confirmimg the money will be transferred in the next available batch.

4. RTGS

RTGS stands for Real-Time Gross Settlement. Money transfers using this method are processed individually on order basis unlike NEFT which is processed batch-wise. This method is generally used to transfer large amounts of money at once.

What differentiates RTGS?

1. RTGS transfers are immediate unlike NEFT.
2. They have a minimum transfer requirement of ₹2 lakhs and a maximum transfer limit of ₹10 lakhs.
3. The money is transferred immediately unlike NEFT which requires some time.
4. The time frame for carrying out RTGS transfers varies from bank to bank but generally lie within the 9:00 am to 5:00 pm window.

How to use this method?

• Registration of beneficiary (if new) in your account. You need to do this only once if the beneficiary is new. The process is exactly like the one described in NEFT method above.
• Login to your online banking portal.
• Add beneficiary (receiver) details such as account number, account type, IFSC code and other required details in the "manage beneficiary/ receiver/ payee" tab.
• The bank will send you an OTP to authorize the added beneficiary. Enter the same when prompted and the beneficiary will be added.
• Transferring money
• Select RTGS under the "Fund Transfer" tab and select the beneficiary to whom you want to transfer the money.
• Enter the amount to be transferred and hit transfer. You'll receive an OTP on your registered mobile number for confirmation.
• Upon confirming the money will be transferred instantly or within a couple minutes.

Note: Before making a transfer using any of these methods, read the applicable conditions and rules (if any). The banks also charges you a specific amount for carrying out the transfers. Consult your bank in case of queries and verify the details with a bank official to stay on the safer side.

Disclaimer:

1) This blog post provides personal finance educational information, and it is not intended to provide legal, financial, tax or any type of official advice.

2) None of the images used in this post are owned by me. They belong to their respective copyright holders.