What is IMPS: Meaning, Features, Transaction Limits & Charges

Immediate Payment Service (IMPS)

IMPS enables instant transfer of funds between accounts. For the banking industry, facilitating real-time and 24/7 interbank fund transfer was a significant challenge. Previously, users were limited to NEFT and RTGS, which only processed transfers during banking hours. IMPS revolutionized this by offering a robust and real-time solution.

The latest government updates indicate a daily limit of ₹5 lakh for IMPS transactions. This article covers what IMPS is and you will understand its charges, IMPS transaction limit per day, transfer time, eligibility, time taken for the transaction, and more.

What is IMPS?

IMPS stands for Immediate Payment Service. IMPS is used for real-time financial transfers via bank online channels such as mobile banking, net banking, SMS, and ATMs. The National Payments Corporation of India (NPCI) facilitates the movement of payments between member banks using this fund transfer mechanism. The transfer between bank accounts happens in a second. 

To begin and execute the transaction, the initiating party needs the beneficiary bank account number and IFSC code. The funds may be transmitted via the IMPS system at any time of the year. This method has a minimum transaction value of ₹1 and a maximum transaction value of ₹2 lakhs. This approach is often utilized by retail consumers for small-value transactions.

The transaction fees differ across banks. For example, there are no fees for sending funds using IMPS via IDFC First Bank. However, depending on the transaction value, HDFC Bank charges between ₹3.5 and ₹15, plus GST.

Objectives of IMPS

IMPS was developed -

1. to enable bank customers to use their mobile phones for convenient account access and money transfers, 
2. to facilitate easier payments using just the recipient's mobile number, 
3. to support the Reserve Bank of India's push for electronic retail payments, 
4. to ensure smooth interoperability between existing mobile payment systems and banks, following RBI's 2008 mobile payment guidelines; 
5. to lay the groundwork for a wider range of mobile-based banking services.

Features of IMPS

Before utilizing IMPS for online money transfers, understand its key features and considerations:

1. Daily Transaction Limit: IMPS transactions have a daily maximum limit of ₹5 lakh, balancing convenience and security for users.
2. Transaction Charges: IMPS transaction fees range from ₹5 to ₹15, depending on the bank's specific terms. Check with your bank for the exact charges.
3. Service Tax: Additional service tax may apply to IMPS transactions, governed by prevailing tax regulations and varying by transaction and bank.
4. 24/7 Inter-bank Transfer: IMPS offers real-time fund transfers around the clock, allowing instant fund transfers between banks regardless of time and location, enhancing convenience and accessibility.
5. Safe and Economical: IMPS ensures secure transactions with robust security measures such as encryption and authentication protocols. It is also considered a cost-effective solution for fund transfers.

IMPS Charges

Users incur charges for each IMPS transaction, varying by amount. Typically, these charges range from ₹2.50 to ₹25 for transactions between ₹10,000 and ₹5 lakhs.

Below is a table showing IMPS charges for various banks in India:

IMPS Transaction Limit Per Day

The Reserve Bank of India has set a daily transaction limit for IMPS at ₹5 lakhs, though this can vary by bank. The minimum transferable amount is ₹1. IMPS services are typically available 24/7, but some banks limit transactions to 8 a.m. to 8 p.m. to reduce fraud and theft risks.

What are the Advantages of IMPS?

IMPS is one of the most convenient, affordable, and secure methods of money transmission. The following are the advantages of IMPS: 

• Multiple access and convenience of use: IMPS transactions may be completed by mobile phones and online banking at any time and from any location, including bank holidays. 
• Money is transmitted in real time, and in circumstances of technical difficulties, money is transferred within an hour. 
• Low transaction cost: Depending on the transaction size and the bank's policy for IMPS transactions, standard IMPS costs vary from 2.5 to 15. 
• Accessibility: IMPS transactions via mobile phones need information such as a mobile number and an MMID (Mobile Money Identifier), which is a unique 7-digit number, the first four of which are the unique identifier of the bank supplying IMPS. However, IMPS transactions via online banking need complete information, including the bank account number and IFSC code.

How to Transfer Money Using IMPS

Step 1: Open the banking app and pick IMPS as a transfer or payment mode, or utilize the SMS facility if your bank supports IMPS via SMS.

Step 2: Enter the recipient's or beneficiary's cellphone number, MMID for bank account number, and IFS code or UID number, amount, and MPIN

Step 3: You will get a screen and SMS confirmation message

Step 4: Make a note of the transaction reference number for future reference.

If the payment is not transferred immediately owing to technical challenges, it is usually done within an hour. A compliance request with the bank, on the other hand, may be made. 

The beneficiary's account number, IFSC, cellphone number, and MMID should be double-checked at all times, it is essential to keep in mind. This is because once money is sent, only the receiver is able to reclaim it. 

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