Difference Between IMPS and UPI Fund Transfer
The digital revolution in India has transformed the way we handle financial transactions. Among the various modes of digital payments available today, Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) are two popular options for transferring funds quickly and securely.
Both services offer instant money transfers, but they have distinct features.
This blog explores the key differences between IMPS vs UPI, helping you understand which payment method is more suitable for your needs.
What is IMPS
The Immediate Payment Service, or IMPS, is an instant payment system developed by the National Payments Corporation of India Limited (NPCIL) that enables real-time interbank fund transfers.
It is available 24/7, including weekends and public holidays, allowing users to send and receive money instantly across India.
Key Features of IMPS
Following is a list of the most important features of IMPS:
- Availability: IMPS is accessible through various channels such as mobile banking, internet banking, ATMs, and bank branches.
- Transaction Limits: The daily transaction limit for IMPS is typically ₹5 lakh.
- Fees and Charges: IMPS transactions usually incur a nominal fee ranging from ₹5 to ₹15, which varies from bank to bank and the transaction amount.
- Security: IMPS uses secure protocols and requires details such as the recipient’s account number and IFSC code for transferring funds.
What is UPI
The Unified Payments Interface (UPI) is a payment system that enables users to link multiple bank accounts to a single mobile application and make instant fund transfers using a Virtual Payment Address (VPA) or mobile number.
UPI was also developed by the NPCIL and has gained widespread popularity due to its ease of use and versatility.
Key Features of UPI
Check out the most essential features that make UPI so popular:
- Interoperability: UPI allows users to link multiple bank accounts to a single app, simplifying fund management.
- Virtual Payment Address (VPA): Instead of using account numbers and IFSC codes, UPI uses a VPA (e.g., yourname@bank) for transactions, making it easier to remember and use.
- No Transaction Fees: UPI transactions are usually free of charge for users, though some banks may charge nominal fees for certain transactions.
- Instant Transfers and Payment Requests: UPI allows both instant fund transfers and the ability to request money from others.
- Wide Acceptance: UPI is widely accepted for various types of payments – from online shopping and bill payments to peer-to-peer transfers.
Key Difference Between IMPS and UPI
While both IMPS and UPI are designed for instant fund transfers, they differ in several aspects, such as user experience, transaction costs, security, and convenience.
Below are the major differences between the two payment systems:
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Factors |
IMPS |
UPI |
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Transaction Process |
To make a transfer via IMPS, users typically need the recipient’s bank account number and IFSC code. The process is slightly more complex compared to UPI, as it requires accurate bank details. |
UPI simplifies transactions by allowing users to transfer funds using a VPA, mobile number, or even a QR code. There is no need to remember your account numbers or IFSC code, making UPI much more user-friendly. |
|
User Experience and Interface |
IMPS is primarily accessed through banking apps, mobile banking, internet banking, and ATMs. The interface depends on the bank, and the process may involve several steps. |
UPI apps such as Google Pay, PhonePe, and Paytm offer a seamless and intuitive user experience. With features like contactless payments, bill splitting, and payment requests, UPI apps provide a modern and convenient interface for all types of users. |
|
Speed of Transactions |
Both IMPS and UPI offer instant fund transfers. However, IMPS transactions may occasionally face delays due to issues related to bank servers or high traffic, especially during peak hours. |
UPI transactions are also processed instantly, but its network is optimised for high-speed, low-latency transactions, making it more efficient during peak times. |
|
Transaction Limits |
The transaction limits for IMPS vary depending on the bank, with a typical daily limit ranging from ₹1 lakh to ₹5 lakh. Corporate accounts may have higher limits. |
The daily transaction limit for UPI is usually ₹1 lakh per day, though this may vary slightly depending on the bank or app. Some banks allow users to increase this limit upon request, but it still remains lower than IMPS for large transactions. |
|
Fees and Charges |
IMPS transactions often involve nominal charges that vary by bank. The charges can range from ₹2.5 to ₹25 per transaction, depending on the amount and the bank’s policies. |
UPI transactions are typically free for customers. However, some banks now charge a nominal fee for certain UPI transactions, but these charges are usually minimal compared to the IMPS fees. |
|
Security and Privacy |
IMPS requires bank account details, such as the account number and IFSC code, for transactions. While secure, sharing these details can be a concern for some users. |
UPI uses a VPA or mobile number for transactions, minimising the need to share sensitive bank details. Additionally, UPI apps use advanced encryption and two-factor authentication (2FA) for enhanced security. |
|
Accessibility and Use Cases |
IMPS is versatile and can be used through various channels, including ATMs and bank branches. It is ideal for transferring funds between bank accounts where account information is available in detail. |
UPI is primarily used through mobile apps and is more suited for peer-to-peer payments, merchant payments, and online transactions. UPI’s flexibility extends to bill payments, QR code payments, and integration with various digital services. |
|
Wide Range of Features |
IMPS is mainly focused on fund transfers and lacks additional features. It serves as a reliable channel for secure and instant transfers but is limited to basic functionality. |
UPI offers a broader range of features, including bill payments, money requests, QR code scanning, and split payments and linking multiple bank accounts within a single app. The versatility of UPI makes it the preferred choice for various financial activities. |
Which is Better: IMPS or UPI
UPI vs IMPS – that decision would depend on your individual needs and preferences. Here are some of the factors that will help you arrive at a better decision:
- IMPS: It provides convenience as it does not require two-factor authentication, making it faster for quick transfers. However, one potential downside for frequent users is that some banks may impose a transaction fee on IMPS transfers, adding an extra cost to the service.
- UPI: One of its key benefits is the option to make payments using VPA instead of sharing sensitive personal or bank account details. It also allows you to send money to multiple recipients at once and has affiliations with many banks across India. Additionally, certain UPI apps come with rewards and cashback on transactions, making it a more cost-effective option for some users.
Overall, while IMPS might be more straightforward for single, quick transactions, UPI stands out for its flexibility, additional features, and potential cost savings.
Summing Up
IMPS and UPI both offer instant fund transfer capabilities, but they cater to different user needs. IMPS is a more traditional service focused on secure interbank transfers, while UPI represents a modern, user-friendly approach to digital payments with a wide range of features and flexibility.
For users who prioritise simplicity, speed, and convenience in everyday transactions, UPI is the clear winner. On the other hand, IMPS remains an ideal option for users needing to transfer larger sums or for those who prefer using traditional banking channels.
Ultimately, the choice between IMPS vs UPI depends on your specific requirements, transaction amounts, and preferred banking mode.
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