In the fast-evolving landscape of digital payments, India has made significant strides, introducing various platforms to make transactions seamless, quick, and secure. UPI (Unified Payments Interface) and IMPS (Immediate Payment Service) are among the most prominent instant payment methods. Both enable users to transfer money instantly, but they differ in terms of usage, features, and limitations.
In this article, we’ll explore the key differences between UPI and IMPS, their advantages, transaction limits, and charges. We’ll also help you decide which is better suited to your payment needs.
What is UPI?
Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NPCI). Launched in 2016, UPI revolutionized digital transactions by enabling users to link multiple bank accounts and transfer funds using a single mobile app.
With UPI, users can make payments using a virtual payment address (VPA), mobile number, or QR code without needing to share sensitive information like bank account details. UPI is widely used for peer-to-peer transactions, bill payments, and even e-commerce purchases. The popularity of UPI has soared, making it one of the most preferred digital payment methods in India.
What is IMPS?
Immediate Payment Service (IMPS) is an older, yet reliable real-time payment system also developed by NPCI. Introduced in 2010, IMPS allows for the instant transfer of funds between banks, 24/7, even on holidays. It is primarily used for account-to-account transfers, requiring details like the beneficiary’s bank account number and IFSC (Indian Financial System Code).
IMPS is accessible via various channels such as internet banking, mobile banking, and ATMs, making it a versatile option for users. While IMPS remains widely used, especially for account transfers, its popularity has somewhat diminished with the advent of UPI.
Difference Between IMPS and UPI Fund Transfer
While both IMPS and UPI facilitate instant payments, they differ significantly in terms of functionality and ease of use. Here’s how:
- Ease of Use:
- UPI: Users can transfer money using simple details like a mobile number, VPA, or QR code. UPI eliminates the need for remembering bank account numbers or IFSC codes.
- IMPS: Requires detailed information like the beneficiary’s account number and IFSC code, making the process slightly more cumbersome.
- Platforms:
- UPI: Can be accessed via mobile apps like Google Pay, PhonePe, Paytm, and bank-specific apps.
- IMPS: Available through mobile banking, net banking, and ATMs, but lacks dedicated apps like UPI.
- Security:
- UPI: Uses two-factor authentication (PIN and app login) and doesn’t require the sender to share sensitive details like the account number. This provides an extra layer of security.
- IMPS: Requires detailed account information, which could make it slightly less user-friendly but is secure due to encryption protocols used by banks.
- Use Cases:
- UPI: Ideal for small transactions, P2P payments, merchant payments, and e-commerce.
- IMPS: Primarily used for transferring funds between bank accounts.
UPI and IMPS Transaction Limits
When considering which payment method to use, understanding the transaction limits is crucial. Here’s how they compare:
Also Read: Meta Unveils Teen Accounts: Improved Privacy and Parental Controls on Instagram
- UPI Limit:
- The UPI transaction limit per day is typically ₹1,00,000 (₹1 lakh) per account, but this can vary depending on the bank. Some banks offer higher limits for verified users or specific merchants.
- IMPS Limit:
- IMPS allows for transactions up to ₹2,00,000 (₹2 lakhs) per day for individual users, though the actual limit may vary based on the bank’s policy and the mode used (e.g., mobile banking or net banking).
IMPS vs UPI Charges
Both UPI and IMPS are cost-effective options for transferring funds, but they differ in the fees associated with their services.
- UPI Charges:
- UPI transactions are mostly free for users. However, some banks might introduce minimal charges for higher volumes of transactions or for merchant payments, but in general, the service remains cost-free for P2P transfers.
- IMPS Charges:
- IMPS transactions may attract small fees based on the amount transferred. Typically, banks charge anywhere between ₹2 to ₹25, depending on the transaction size, with GST applicable. These charges can vary from one bank to another, so it’s advisable to check with your bank for exact rates.
Disadvantages of IMPS
Though IMPS is a reliable service, it does have some drawbacks compared to newer payment systems like UPI:
- Complexity: IMPS requires detailed account information such as the account number and IFSC code, making the process less user-friendly compared to UPI’s VPA-based transfers.
- Charges: While UPI is mostly free, IMPS transactions come with charges, which may deter users from making frequent small payments.
- No Merchant Payments: IMPS is designed mainly for account-to-account transfers, whereas UPI is more versatile, supporting peer-to-merchant payments through QR codes and UPI IDs.
- Limited Access via Apps: IMPS doesn’t have a standalone app and is dependent on mobile and internet banking platforms.
Which is Better: IMPS or UPI?
When choosing between IMPS and UPI, it largely depends on your usage:
- For Ease of Use: UPI wins hands down. With just a mobile number or VPA, users can complete a transaction without needing to enter lengthy account details.
- For Large Transactions: If you need to transfer large amounts, IMPS may be a better option since it has a higher transaction limit (₹2,00,000 vs ₹1,00,000 for UPI).
- For Everyday Transactions: UPI is the preferred option due to its wide accessibility, ease of use, and mostly free services. It’s perfect for small, daily transactions such as splitting bills, paying for groceries, or making payments at merchants.
- For Traditional Account Transfers: If you’re looking for a more structured, account-to-account transfer service, IMPS is still a strong contender.
Conclusion
Both UPI and IMPS have their own strengths, and the choice between the two depends on your needs. UPI has revolutionized the way India handles digital payments, offering seamless, user-friendly transactions for day-to-day use. On the other hand, IMPS remains a solid and secure option for larger, more traditional transfers.
If you’re making frequent small payments or looking for an all-in-one solution for e-commerce, peer-to-peer transfers, and bill payments, UPI is likely your go-to option. However, if you require a reliable method for transferring larger sums between bank accounts, IMPS can serve you well.
Understanding the differences between UPI and IMPS can help you make more informed decisions and leverage the benefits of both systems effectively.
