NEFT vs RTGS vs UPI: Which Payment Mode Is Right for You?

20th July 2025, Gaurav Kumar Singh

🏦 Introduction

India has become a global model for digital banking. Thanks to platforms like UPI and IMPS, even a street vendor in a Tier-3 town can accept real-time payments. But not all fund transfer needs are the same—paying a friend for coffee is very different from paying a supplier ₹10 lakhs for machinery.

So, which fund transfer method should you choose? Let’s decode each method in the Indian banking system—with real-world examples, limits, and use cases—to help you decide smartly.

🔹 1. NEFT (National Electronic Funds Transfer)

📌 What It Is:

NEFT is a nationwide electronic fund transfer system launched by RBI. It allows you to send money from any bank to any other bank in India.

🔍 Features:

Batch processing: Transactions are settled in half-hourly batches.

Available 24×7, even on Sundays and holidays.

Suitable for individuals, businesses, and government payments.

✅ Example:

Rohit wants to pay ₹25,000 to his landlord’s account in another city. He logs into his bank app and transfers the amount using NEFT. The money is credited within 1 hour.

💼 Ideal For:

Rent payments

Freelance payments

Medium-value business transactions

🧾 Charges:

Mostly free for retail users. Some banks charge ₹1 to ₹5 for corporate/bulk NEFT.

🔹 2. RTGS (Real-Time Gross Settlement)

📌 What It Is:

RTGS is designed for high-value, time-sensitive transactions. Payments are settled immediately and individually, not in batches.

🔍 Features:

Minimum amount: ₹2,00,000

No upper limit

Real-time settlement

✅ Example:

A company buying raw materials worth ₹15 lakh needs to pay the supplier urgently. They use RTGS from their current account to settle the payment instantly.

💼 Ideal For:

Real estate transactions

Business-to-business (B2B) payments

Government dues

🧾 Charges:

Usually free for online RTGS. May vary from ₹15–₹50 for offline branch-based transfers.

🔹 3. IMPS (Immediate Payment Service)

📌 What It Is:

IMPS is a real-time, 24×7 money transfer service initiated by NPCI. It works even on bank holidays and Sundays.

🔍 Features:

Instant settlement

Available via net banking, mobile banking, ATM, and even SMS

Max limit: ₹2 lakh (can vary by bank)

✅ Example:

Priya forgot to pay her college exam fee on a Sunday. Using her mobile banking app, she uses IMPS to instantly transfer ₹1,500 to the university’s bank account.

💼 Ideal For:

Urgent payments

Friends and family transfers

Bill payments

🧾 Charges:

₹2 to ₹10 depending on the amount, but many banks offer it for free now.

🔹 4. UPI (Unified Payments Interface)

📌 What It Is:

UPI allows instant bank-to-bank transfers using a simple mobile number or UPI ID, with no need for IFSC or account number.

🔍 Features:

No need to log into net banking

Scan-and-pay via QR code

Most popular payment mode in India

Limits vary: Usually ₹1 lakh to ₹5 lakh per day

✅ Example:

Anita buys groceries worth ₹800. She scans the shopkeeper’s QR code using PhonePe and pays instantly from her SBI bank account via UPI.

💼 Ideal For:

Day-to-day personal expenses

Small business collections

Utility bill payments

Peer-to-peer money transfers

🧾 Charges:

Free for users (zero transaction fee)

🔹 5. Aadhaar Enabled Payment System (AEPS)

📌 What It Is:

AEPS allows basic banking services like balance inquiry, cash withdrawal, and fund transfer using Aadhaar number and biometric authentication.

🔍 Features:

Used in rural areas via micro-ATMs

No debit card or smartphone required

Often used by pensioners and direct-benefit-transfer (DBT) recipients

✅ Example:

A farmer in a remote village withdraws ₹500 cash from his Jan Dhan account using his Aadhaar number and fingerprint at a CSP (Customer Service Point).

🔹 6. Cheque and Demand Draft (Traditional Methods)

🧾 Cheque Transfer:

You write a cheque to someone who then deposits it into their bank account.

Example: A tenant pays ₹50,000 rent via post-dated cheque every month.

🧾 Demand Draft:

A prepaid instrument issued by a bank, often used for university admissions, visa applications, etc.

Example: A student applying for an MBA course in Delhi sends a ₹75,000 DD for fees to the college.

📊 Comparison of Fund Transfer Methods in India (2025)

🔹 1. NEFT (National Electronic Funds Transfer)

Speed: 30–120 minutes

Availability: 24×7

Limit: No limit

Cost: Mostly free

Best Use: Medium-value transfers, rent payments, salary disbursements

🔹 2. RTGS (Real-Time Gross Settlement)

Speed: Real-time

Availability: 24×7

Limit: Minimum ₹2 lakh, no upper limit

Cost: Mostly free

Best Use: High-value transactions such as property payments, large business transfers

🔹 3. IMPS (Immediate Payment Service)

Speed: Instant

Availability: 24×7

Limit: Up to ₹2 lakh (may vary by bank)

Cost: ₹0 to ₹10 (some banks offer it free)

Best Use: Emergency fund transfers, utility bills, small-value payments

🔹 4. UPI (Unified Payments Interface)

Speed: Instant

Availability: 24×7

Limit: ₹1 lakh to ₹5 lakh per day (varies by app/bank)

Cost: Free

Best Use: Peer-to-peer (P2P) transfers, mobile payments, shopping, and daily transactions

🔹 5. AEPS (Aadhaar Enabled Payment System)

Speed: Instant

Availability: 24×7 (mainly in rural areas)

Limit: ₹10,000 per day*

Cost: Free

Best Use: Cash withdrawals, transfers in rural areas without smartphones or debit cards

🔹 6. Cheque Transfers

Speed: 1–3 working days

Availability: Bank working hours

Limit: No limit

Cost: Free (bounced cheque penalties apply)

Best Use: For non-digital users, formal payments, or where digital mode isn’t feasible

🔹 7. Demand Draft (DD)

Speed: 2–5 working days

Availability: Bank working hours

Limit: As decided by the issuing bank

Cost: ₹100 or more (depends on amount and bank)

Best Use: Educational fees, government forms, visa applications

🛡️ Tips for Safe Online Transfers

Always use official banking apps or UPI apps like BHIM, Google Pay, PhonePe.

Do not share UPI PIN or OTP with anyone.

Use two-factor authentication (2FA) for net banking.

Keep mobile banking apps updated.

Verify beneficiary details before confirming transfers.

✅ Conclusion

India’s fund transfer methods are diverse, secure, and increasingly user-friendly. Whether you’re sending ₹100 via UPI or ₹10 lakh via RTGS, there’s a system designed just for your need. Understanding these systems helps you avoid fraud, delays, and extra charges—while embracing the shift to a truly digital economy.

Make the right move, use the right method.

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