Everything You Need to Know about IMPS
IMPS stands for Immediate Payment Service and is an electronic system for transferring funds in India. Launched almost 9 years ago, this system has functioned as the roadmap to launch FinTech that is used today. For instance, UPI is a form of IMPS that would not have been possible without this technology coming in first.
While digital payments are slowly becoming more accepted in India, IMPS is one form of payment that seems to be very widely adopted by its citizens. National Payments Corporation of India (NCPI) data shows that IMPS payments in India during the first financial quarter of 2018-19 had crossed over Rs 3,23,826.79 crore. This figure shows the doubling of these payments within a span of a single year as they stood at a mere Rs 1,74,419.45 crores during the first financial quarter of 2017-18.
Thus, as consumers, it pays to understand what this payment system is and how you can use it on a day-to-day basis. This article explores the benefits of IMPS for consumers and businesses alike.
What are the benefits of IMPS payments?
Think of the last time you conducted a transaction through your phone. Whether you were buying a new pair of shoes, or were simply sending money to your family, the process was quick and occurred in real-time. IMPS payments stand out from their predecessors NEFT and RTGS mainly because of this reason. While NEFT may process payments hourly, and RTGS payments occur within a specific time frame of 9am-2pm (which may vary from branch to branch), IMPS occurs as and when the customer wants it to. The following are some of the benefits of IMPS.
Transactions occur in real time; payments occur instantly
This is a feature that has contributed largely to consumer behavioural changes across India about shopping. Additionally, if one were to consider the on-demand economy, instant transactions are what facilitate such services the most. Consumers and vendors have now learnt to expect quick, hassle-free payments at the drop of a hat. The benefits of this are not just limited to friends and family who may require money from the sender on an immediate basis due to an emergency. The emerging freelance workforce of India stands to benefit from receiving instant payments from clients too. The quick nature of these payments ensures that all financial processes between customers and businesses stay dispute-free.
The process is very simple
Often, the simplicity of certain processes is what contributes to its widespread acceptance. The same holds true for IMPS. When setting up beneficiary details for the first time, consumers must enter all the relevant details such as name, bank account number, IFSC codes or MMID numbers, and so on. Depending on the bank you use, you may be able to transfer the required funds to a beneficiary within 30 minutes. Once the first transaction with the new beneficiary has occurred, all future payments are instantaneous.
There are no time constraints
NEFT and RTGS operate within banking hours. They are also subject to public holidays. However, this is not the case with IMPS payments. As the service works 24×7, consumers can send or receive payments at any given time.
Consumers can use multiple payments channels
While many consumers are now accustomed to making payments via their smartphones, IMPS functions on payment channels that do not require internet use as well. Apart from net-banking and mobile banking, consumers can also use good old-fashioned SMS to facilitate payments. They can also do so by using ATMs. Therefore, consumers across all social classes can arguably use this form of payment.
The process ensures secure payments
Each transaction goes through multiple rounds of verification before banks green-light them. As a result, IMPS is a very secure form of conducting financial transactions.
What restrictions on fund transfers apply to IMPS?
When compared to RTGS and NEFT, IMPS offers restrictions that keep in mind the needs of an average consumer looking to make generic payments. Have a look at the table below to compare the differences between the three:
|Minimum transaction amount||Rs 2 lakh||Re 1||Re 1|
|Maximum transaction amount||No upper limit has been placed on RTGS transactions||Transaction limits vary from bank to bank||Transaction limits vary from bank to bank|
As you can see, while RTGS and NEFT may have higher upper limits, IMPS is most likely to serve consumers looking to meet their day-to-day transaction needs. The low minimum transaction amount means that you can use this system to pay your bills at your local Kirana (if the vendor allows you), shop through apps on your mobile phone, or send money to family.
Of course, if you are looking to send exorbitant amounts of money, NEFT and RTGS may be the way to go. The downside will be the time constraints you must operate within.
IMPS has not only changed consumer behaviour and expectations, but has also paved the way for newer forms of instant payment systems to operate in India. The fact that consumers can use this system without needing a smartphone adds to its financial inclusivity, making it a great payment option for the masses!