NEFT, RTGS, UPI: What should you use to transfer money?
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NEFT, RTGS, UPI: What should you use to transfer money?

We help you choose the best way to make online fund transfers

The D-Way

Digital transactions have increased sharply after demonetisation. The trend has been helped by the plethora of options available today for online transfer of funds. But there is a flip side to this too. The sheer number of options makes it difficult to people to decide which one is best for them.

So, we did a comparative analysis of the various methods for transferring money online if you have a bank account, based on factors such as cost, transfer limits, etc, to help you make the right choice.

The NEFT way

The National Electronic Fund Transfer, or NEFT, is one of the most commonly-used ways of transferring money online from one bank account to another. The system is based on a deferred settlement basis. This means the money is transferred in batches. At present, there are 12 settlements between 8am and 7pm on weekdays and six settlements between 8am and 1pm on Saturdays.

There is no cap on the amount of money that can be transferred. However, individual banks may set a limit. State Bank of India, for example, has capped the NEFT transfer amount under retail banking at Rs 10 lakh.

The Process

  1. Your bank branch has to be NEFT-enabled. You can check on the Reserve Bank of India's (RBI's) website if it is so.
  2. Get a net banking login id and password. Also, register your mobile number with the bank.
  3. Add the details of the beneficiary to whom you want to transfer money. For this, you need the name of the person, his or her account number and 11-digit alpha-numeric IFS (Indian Financial System) code for the bank branch. The IFSC is printed on the cheque leaf. It is also available on the RBI website.
  4. After adding the beneficiary, you may have to wait for some time before you can transfer money. For instance, in case of ICICI Bank, you can transfer money after half an hour of the addition of the beneficiary. In case of SBI, it is four hours.
  5. Log in to your net banking account, go to 'Transfer Funds', select the beneficiary (you can add multiple beneficiaries) and transfer money by entering the one-time password that you will get on your mobile phone.
  6. The money will be transferred to the beneficiary's account when the next settlement is scheduled.


The Cost Factor

The cost ranges between Rs 2.50 and Rs 25, plus service tax, depending upon the amount.

The Limitations

You can't transfer money under NEFT any time you want to. Praveen Kutty, Head, Retail & SME Banking, DCB Bank, says, "The transfer is not instantaneous. Also, the facility is available only on bank working days, and that excludes weekends and bank holidays."

The RTGS Option

The Real Time Gross Settlement, or RTGS, is for high-value transactions. The minimum amount is Rs 2 lakh. There is no cap. The transfer happens on a real-time basis throughout the RTGS business hours. The bank of the person to whom the money is transferred gets 30 minutes to credit it to his or her account.

The RTGS window is open from 9am to 4.30pm on weekdays and 9am to 2pm on Saturdays.

The Process

You have to make sure that your as well as the beneficiary's branch is RTGS-enabled. The rest of the process is the same as NEFT's.

The Cost Factor

The RTGS costs more than the NEFT. The charges may differ from bank to bank but can't exceed Rs 30 for transfers of Rs 2-5 lakh and Rs 55 for transfers above Rs 5 lakh.

The Limitations

The branches of both the account holder and the beneficiary have to be RTGS-enabled. Not all bank branches offer this facility. The list of RTGS-enabled branches is available on the RBI's website. You can't use the facility on Sundays and holidays.

The Immediate Service

The immediate payment service, or IMPS, is an instant fund transfer service. It is a 24x7 facility. You can use it anytime during 365 days of the year. It was launched by National Payments Corporation of India in 2010. Just like NEFT and RTGS, it can be used through mobile as well as internet banking.

If you have the net banking facility, you don't have to register separately for IMPS. Once you initiate the transaction, you are given different options such as NEFT, RTGS and IMPS. You can just click on IMPS.

For using IMPS through internet banking, you need the beneficiary's account number and the IFS code of the bank branch for registering him or her. In case of mobile transfer, you have to know the beneficiary's account number as well as the MMID (Mobile Money Identifier) code, a seven-digit number issued by the bank if the person is using mobile banking as a beneficiary. In case of IMPS through mobile, there is no need to register the beneficiary.

The charges

The charges are decided by banks. Generally, the charge is Rs 5 for transfer up to Rs 1 lakh and Rs 15 for Rs 1-2 lakh. A service tax is also levied.

The limitations

The transaction limit is Rs 2 lakh through internet banking.

Unified Payments Interface

UPI-enabled apps allow transactions to be done through any smart phone using VPA (Virtual Payment Address). The aim is to enable people to complete transactions in less time by reducing the number of steps. The transactions can be done 24/7; the transfer happens on a real-time basis. The best thing is that there is no need to share personal details such as bank account or credit/debit card number. UPI-enabled apps allow transfers up to Rs 1 lakh.


Steps to use UPI

  1. Download a UPI-enabled bank app or update existing bank app to make it UPI-enabled.
  2. Login using bank details
  3. Create an email-like virtual payment address (VPA).
  4. To create the virtual id, after logging in, go to the 'UPI' option, click on 'manage' and then select 'create virtual payment address'
  5. After entering your account number, select 'create new VPA' option and type in the desired virtual id address (eg: xyz@bankname) and click on the 'submit' option.
  6. You have successfully created the VPA and are ready to transact using UPI.

Sending Money Using UPI

  1. Login to the UPI-enabled bank app and select the UPI option.
  2. Click on 'pay to virtual payment address'; make sure you have the receiver's virtual id.
  3. Enter the receiver's virtual ID, the amount that needs to be sent and the account from where the money is to be sent.
  4. After the confirmation screen appears, review the payment details and select 'submit' to make the final payment.

The Cost Factor

"No fee is charged for use of the UPI platform in case a person transfers money to another person. In case a person pays to a merchant, around Rs 15 is charged, which is to be paid by the merchant. But this, too, has been waived after demonetisation," says Vivek Lohcheb, Co-founder, Trupay.

The Limitations

"The transaction cap is Rs. 1,00,000. This is subject to the UPI guidelines. Certain banks may levy additional per-day limits based on other transactions carried out via the mobile banking app," says Praveen Kutty, Head- Retail & SME Banking, DCB Bank.

USSD-based *99# service

The National Payment Corporation, the umbrella organisation for the retail payments system in India, offers the Unstructured Supplementary Service Data (USSD) technology-based *99# service, which allows a person to do mobile banking transactions such as generating mini-statement, checking account balance, sending/receiving funds, etc, without downloading any app.

"Considering that basic services such as balance enquiry and fund transfer are available in all phones (feature and smart phones), it can be the most universal e-payment mechanism in the country," says A.P. Hota, Managing Director and CEO, National Payments Corporation of India.

USSD is the service that allows you to check your mobile phone balance. The USSD-based *99# service was launched to help those without smart phones. It can be used 24x7, even on holidays. The only requirements are that your mobile phone number should be registered with your bank and you should have a GSM phone.

You can do mobile banking through sms also but for that you need to remember the different codes for different banks. In the *99# service, the same codes can be used for every bank.

Ways to transfer funds using the *99# service

  1. Get the MMID number, a seven-digit unique number issued by the bank to the account holder for using mobile banking.
  2. Get the IFS code and the account number of the beneficiary.
  3. Use of the beneficiary's Aadhaar number.

How to use:

  1. To perform any function using this service, dial *99# from your GSM phone.
  2. The welcome screen will ask you to enter the first three digits of your bank name or the first four letters of your IFS code.
  3. After you enter the IFS code, a service menu will appear
  4. You can key in 1 to know the balance in your bank account, 2 for getting mini-statement, 3 for fund transfer using MMID and mobile number, 4 for fund transfer using account number and IFSC, 5 for fund transfer using the beneficiary's Aadhaar number, and 6 to know your MMID.
  5. If you are doing a non-financial transaction such as checking the account balance or getting a mini-statement, a confirmation screen will appear. If you are doing fund transfer, you will be asked to enter the IFS code and the account number of the beneficiary or the MMID number along with the mobile number of the beneficiary.

Charges for using *99# service

You will be charged for using this service just like you use the sms service on your phone.

The charges will depend on your telecom service provider but the Telecom Regulatory Authority of India, the telecom regulator, had set a limit of Rs 1.50 per transaction. This has been reduced to 0.50 paise. There are no additional charges for using the facility in roaming.

The limitations

Poor network can play a spoilsport. Also, the maximum amount you can transfer through this service is Rs 5,000 per day.

Which one to choose?

You can select the option considering the charges and the time you have. "Any person who has a smart phone can opt for UPI simply because it can be used 24/7, including on weekends & holidays, and from anywhere. Organisations that want to transfer large funds can opt for RTGS or NEFT. In the end I would say that while we have a wide range of options for payments, each one has its unique benefits," says Kutty of DCB Bank.