Here’s a list of the different types of money transfers in India, you should know about:

NEFT

NEFT stands for National Electronic Fund Transfer. Transferring money from one bank account to another is considered one of the most popular types of money transfer in India. This process has no maximum limit on money transfer amount, but the individual banks have the right to set any limit. For carrying out NEFT, you need to have the receiver’s bank account number and the bank’s IFSC code. You need to follow the below-mentioned steps to send money:

• Firstly, as you open the Fund Transfer section, choose the option “Fund transfer to other banks.”
• Now, you need to provide all the receiver’s bank details, like the account number and the IFSC code.
• Fill in the amount you want to send
• Recheck all the details, accept the terms and conditions, and complete the process. 

RTGS

The term RTGS refers to Real Time Gross Settlement. This money transfer process is almost similar to NEFT, but the difference lies in the minimum amount and how much time NEFT takes to credit the amount in the receiver’s account. RTGS is used for making large transactions that are more than two lakhs. However, this process has no maximum limit, making it easier for people to make huge transactions. 

As the name itself suggests, the money is transferred on a real-time basis, and it is one of the main differences between NEFT and RTGS. It proves to be of great help at times of urgency, as the money gets credited to the receiver’s bank account within just thirty minutes of completing the process. Steps for carrying out the RTGS transfer are mentioned below:

• Go to the Fund Transfer Section. 
• Choose the ‘transfer to other banks’ option. 
• Enter all the required details. 
• Recheck the details, and agree to the terms and conditions. 
• Click on Submit. 

IMPS

IMPS stands for Immediate Payment Service. IMPS brings all the benefits of RTGS and NEFT on the same plate. As the name suggests, IMPS provides the benefits of instant transfer to users. To your good news, the minimum limit for carrying out the IMPS money transfer is set very low. Speaking of RTGS vs IMPS, in RTGS, you need to make a minimum transfer of two lacs, but in IMPS, you can enjoy the benefit of instant money transfer to your receiver’s bank account in case of small transactions too. However, to carry out the process, you must know the receiver’s IMPS id and his registered mobile number. Carry out the following steps to make a successful IMPS transaction:

• Get access to your mobile banking or net banking using your ID and password. 
• Open the Fun transfer section. 
• Choose the option of IMPS as the mode of transfer
• Fill in the amount you want to send
• Click on the confirm button
• You will need to submit the OTP you will receive on your registered mobile number.
• Enter the OTP
• Recheck all the details, and click on the Submit option. 

UPI

UPI or Unified Payments Interface is one of the most convenient types of money transfer methods from bank to bank. You just need to have a smartphone and a stable internet connection to carry out the transaction. This process is carried out using VPA or Virtual Payment Address. The plus point is that you don’t have to carry any details of the receiver’s bank account. Instead of their bank account number and IFSC code, you just need to have their registered mobile number with UPI or their name. Also, you can use this method to transfer money at any time; it is available 24/7. UPI allows you to make transactions of up to 1 lac, which forbids you to allow this method while making large transactions. 

Cheque

Although it is a traditional method of transferring money from bank to bank, many people consider it a convenient option for money transfer. You can just put your name on the payee section of the check you have drawn. Then, fill in the receiver’s bank account number and the amount you want to transfer. Also, don’t forget to put your signature on the check, ensuring that it matches your signature associated with your bank account. 

The process is more straightforward and more immediate if done within the bank. However, in the case of other banks, the receiver may need to wait for two to three days. There is no upper limit in transferring money through cheque, but the receiver may face restrictions during the withdrawal process. If he wants to withdraw in branches other than his home branch, he may not withdraw more than 50,000. 

You must have been very clear about the different types of money transfers by now. Now, all you need to do is choose the method which suits your requirements. IMPS or UPI will work great if you want to send a small sum instantly. However, for larger transactions, you may go for RTGS. If you face any net banking or mobile banking issues, you can opt for cheque transfers. Don’t forget to recheck all the details of the receiver before proceeding with the transaction, or else you may lose money. Don’t stress too much; choose the ideal method, and enjoy the seamless process of transferring money. 

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UPI was ahead of net banking and other card-based payments by a margin during 2020, and Indian consumers are steadily moving towards adopting it.

September 2021 saw a record ₹6.54 crore worth of transactions via the UPI medium. A steep 2x jump was observed compared to the numbers for the same period in 2020. Even the number of banks that support UPI rose by 50%, from 174 to 259.

What is UPI?

A report released by Macquarie stated that UPI payments formed 10% of all retail payments made in the first four months of 2021. The growth is phenomenal, considering its share was limited to only 2% a few years ago.

In 2016, the National Payments Corporation of India (NPCI) collaborated with the RBI (central bank of India) and the IBA (Indian Banks Association) to develop a modern payment solution that would enable banks to transfer funds for individual account holders seamlessly. The collaboration resulted in the development of the UPI platform.

The unified payment interface or UPI is a banking interface that allows users to transfer money between bank accounts via a single window. It is an advanced version of IMPS and NEFT and looks to eliminate the need for the users to enter their credentials every time before making a transaction.

Features of UPI Payments

UPI looks to eliminate the clutter around digital payments. Here are the key features of UPI payments: 

Reliable

A significant chunk of our digital payments would fail or take longer than expected to process a few years back. It left us fuming, and we were looking for an innovative solution. With the advent of UPI, reliability became one of the most prominent features of digital payments. It brought about greater control for the users and eliminated the need to maintain multiple third-party apps for different purposes. 

Real-time Transactions

NEFTs in the old days would take some hours to transfer funds across bank accounts, and that was the fastest during its time. With UPI, transfers take place in real-time. All the customer needs to do is click on the pay button, verify their credentials, and complete the payment within seconds. It has allowed customers to use digital payments for various daily tasks, such as buying medicines, vegetables, paying for their Uber drive, and more. 

No Floor Limit on Transactions

How would we like our digital bank payments to be? We would like to see something that could process any amount required (subject to an upper limit for security purposes). That is what UPI does. It allows users to transfer as low as INR 1 with ease. Find out more about the UPI transaction limit here.

No Transaction Charges

RTGS and NEFT were criticized because they had charges attached to them. With UPI, you can send any amount you wish without having to pay a single penny. It allows for a clutter-free and convenient experience for the users. 

Inclusive

Do you have only an app that supports UPI? Great, it works. Are you suffering from a lack of internet connectivity and still wish to make UPI payments? Thankfully, that is possible too. All you need to do is send a specific message enabling the bank to carry out the transaction on your behalf. It has allowed people living in areas with limited connectivity to adopt digital payments seamlessly. 

Check this blog to find out how to create UPI Id.

How Does UPI ID Work?

If you want to carry out a UPI transaction, you will need a VPA or virtual payment address (for example – Joedempo@oksbi). You can link multiple bank accounts to the same VPA for carrying out UPI transactions. But how does it work? Well, various entities come together to ensure a successful transfer of funds. 

Here are the entities involved in carrying out a successful UPI transaction: 

Payment Service Provider (PSP)

Apps like BHIM and others are available at the consumer’s end to initiate and complete a UPI transaction. NPCI issues certificates to specific apps allowing them to carry on UPI-based transactions and issuing UPI handles. At present, there are over 20 third-party apps that can undertake UPI transactions. 

NPCI

NPCI is funded by a plethora of banks across the country and is a non-profit organization. RBI formulated it to facilitate data flow between banks and ensure that the payment is routed via the allowed mediums. The user can register for all these apps and create a different UPI ID to help users in solving their issues with UPI payments. 

Sender’s Bank

The next party involved in a UPI transaction is the sender’s bank or the issuing bank. These bodies receive a request from NPCI to debit money from the sender’s account. Once the debit is complete, the sender’s bank intimates that the transaction has been processed. 

Receiver’s Bank

The receiver bank or the acquiring bank is responsible for crediting the money in the receiver’s account of a UPI request. Once they credit the requisite account, they send an intimation to NPCI confirming the successful credit. 

Payee Payment Service Provider (Payee PSP)

Merchants use the payee payment service provider or payee PSP for P2M (payment to merchant) transactions. 

Partner with PayU India for effortless UPI transactions

The UPI is a robust payment infrastructure that has been instrumental in streamlining digital payments and making them accessible to all. Its working is simple and clutter-free, allowing it to be inclusive and play a significant role in the Indian government’s digital drive. 

But it is also imperative for businesses to partner with a capable UPI partner to make receipt and payment seamless via this medium. At PayU India, we understand the need for you to create a robust online presence. We allow a one-click, no coding, no developer, secure solution to seamlessly integrate with your existing payment infrastructure and undertake UPI transactions with ease. Click here to explore our services. 

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