A group of friends decide to dine out. Everybody enjoys their meal, and chose to split the bill. Most of them use their banking apps or cards, but Rahul decides to draw a cheque.
Rahul froze time and took everybody back to 99. Just Kidding!
Well, back then, cash was (still is, to some extent) the most popular way to transfer and manage funds, along with cheques and bank drafts. Soon, the internet boomed, and today, banking from the comfort of your sofa is a reality.
Everything to do with your finances happens with a click. Internet banking has freed people from the hassle of paperwork, long queues, and frequent bank visits; allowing people to transfer funds to third party accounts as per their convenience.
Third Party Transfers (TPT)
Third Party Transfer is a feature that can be used to transfer funds from your current bank account to another account, within your current or any other bank.
In banking language, Third Party Transfer is called as a credit-push system, which means transactions can be originated only to remit funds to a beneficiary.
Transactions covered under Third Party Transfers
NEFT
National Electronic Fund Transfer, launched in 2005, maintained by the Reserve Bank of India (RBI) is a mode that helps bank customers transfer funds between two NEFT-enabled bank accounts on a one-to-one basis.
Interestingly, NEFT was lauded as the quickest method to transfer funds online until UPI came along in 2016. Consumers looking to initiate NEFT transactions must do so within the stipulated neft transfer time for bank branches.
Sometimes, these can vary from branch to branch. As a general rule, NEFT transactions occur between 9:00 am to 7:00 pm on weekdays, and 9:00 am to 1:00 pm on Saturdays.
| Pros | Cons |
| No processing charges | Batchwise clearing mechanism |
| No maximum limit set by RBI | 23 half-hourly settlement cycles |
RTGS
Real Time Gross Settlement is primarily designed for large fund transfers. Unlike NEFT, the payment transaction is not subject to a waiting period.
It is settled as soon as they are processed because RBI monitors the transfer, and the payment is considered as final and irrevocable. In order to use RTGS, the sender and receiver’s banks need to be RTGS enabled.
It is crucial to keep in mind that RTGS payments are linked with banking hours. Customers can only make this form of payment between 9:00 am – 4:00 pm on weekdays, and 9:00 am – 2:00 pm on Saturdays.
| Pros | Cons |
| No upper limit | Minimum amount of transfer is Rs 2 lakhs |
IMPS
Immediate Payment Service is an instant inter-bank fund transfer service, which helps people transfer funds quickly to any IMPS beneficiary.
Available at all times for usage, IMPS is also being extended through other channels such as ATMs, internet banking, etc. The service works 24×7, consumers can send or receive payments at any given time.
| Pros | Cons |
| Can be used 24*7 to transfer funds | Service Tax |
| Mobile-friendly |
Related Read: Difference Between IMPS and UPI
Conclusion
In this article, we have tried to explain about third party transfers, and the transactions covered under them.
So, what’s the most convenient way for you to transfer money between accounts? Have you used a third party transfer? If you have, did you face any problems while transferring funds?
Do share your views. We’d love to hear about them.
