IMPS vs UPI: Which Digital Payment System Is Better for You?

IMPS vs UPI: Which Digital Payment System Is Better for You?

Nowadays, it is very easy to transfer money without any delay. In India, the most popular money transfer options are IMPS and UPI. Using these modes of payment, individuals can send and receive money conveniently using their mobile phones or the internet. When picking between these two options, many are unsure which is the best, IMPS vs UPI. 

Thanks to these platforms, transferring money is now simple, quick, and most importantly, safe. Let’s discover why they are special and why their users consider them safe to send money.

What Are IMPS and UPI?

Sending money from one user to another is quick and straightforward today. Most transactions in India happen through IMPS or UPI. They allow you to transfer money fast, but there are some differences in how they function. We should understand the differences when you have the option of IMPS vs UPI.

IMPS: Real-Time Interbank Transfers Since 2010

IMPS means Immediate Payment Service. The National Payments Corporation of India (NPCI) started it in 2010. You can easily send money between different banks anytime, no matter the day or time. You have access to it through mobile banking, internet banking or by using ATMs. You will have to enter the account number and the IFSC code. If UPI is unavailable, IMPS gives you the chance to make quick, secure transfers.

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UPI: Unified Payments Interface and Mobile Simplicity

UPI, or Unified Payments Interface, introduced by NPCI in 2016, allows funds to be moved easily. You only have to share your UPI ID or phone number linked to your bank account. We can use it through apps such as Google Pay, PhonePe, and BHIM. You can send, receive, or pay bills quickly with UPI. UPI, which currently has over 260 million users, has elevated India to the forefront of real-time financial transactions globally.

Key Differences Between IMPS and UPI

Comparisons are often made between IMPS and UPI for digital payment transfers in India. Although they both happen instantly, they operate differently and have certain distinct features.

Transaction Process and Ease of Use

Money transfers using IMPS are very quick since you only need the mobile number and MMID or bank account details of the person you want to transfer to. The service operates every day and on holidays, too. UPI is easy to use since it uses a different method. People can send money using the UPI ID or the mobile number linked to their bank account. You don’t have to keep track of account information when using UPI.

User Experience and Interface Accessibility

You can use IMPS through the Internet or mobile banking applications. It could be a little confusing for people using it for the first time. On the other hand, using UPI is more straightforward. Various apps such as Google Pay, PhonePe, and Paytm now include it. Navigating the system is straightforward and doesn’t take much time. UPI allows users to pay bills without hassle, scan QR codes, and shop online.

Security Features and Authentication Methods

A user of IMPS must enter their bank details and sometimes an OTP to finish a transfer. Customers receive an additional level of security, thanks to a mobile verification system and a UPI PIN. Since it doesn’t reveal what’s in your account, it is more secure and private. All transactions on UPI are made more secure through strong encryption.

Comparing Transaction Limits and Charges

People commonly use IMPS and UPI to make instant money transfers. Both have pros, especially regarding payment limits and fees. This allows you to identify the platform that best fits your requirements.

IMPS Limits and Fees (₹5 Lakh Max, ₹2.5–₹25 Charges)

Funds can be sent via IMPS or Immediate Payment Service, anytime in India. It is possible to make IMPS transactions up to ₹5 lakh per day. Your IMPS fees will be different depending on your choice of bank and the amount involved. Usually, fees are between ₹2.5 and ₹25, including GST. Users who require a safe way to send larger sums at any time can rely on IMPS.

 UPI Limits and Fees (Typically Free, ₹1–₹5 Lakh Cap Based on Category)

UPI or Unified Payments Interface is widely used every day because it usually doesn’t cost anything to use. Most people can only do UPI transactions up to ₹1 lakh per day. However, when it comes to education and hospital expenses, the limit is raised to ₹5 lakh. All you need to use UPI is a UPI ID or mobile number, and there is no need for bank account numbers.

Which System Is Better for High-Value Transfers?

When comparing IMPS vs UPI for high-value transfers, IMPS is somewhat more dependable than UPI because of its consistent ₹5 lakh cap. When it comes to convenience and paying less, UPI is a good option, but there are bank rules that might apply. Make your decision depending on how much money you need to send and how quickly you need it.

Use Cases and Ideal Scenarios

Transferring money online is now easy and can be done in a matter of minutes. IMPS and UPI rank high among the most chosen options. Each platform is designed for different purposes, depending on the user. We should explore where each one belongs best.

When to Use IMPS

IMPS is perfect for sending larger sums immediately when UPI does not serve your needs. It never stops working and can help you send money between your bank accounts, even when the banks are different. If UPI fails or extra safety is necessary, it is preferred to use IMPS through net banking or mobile banking.

When to Use UPI

UPI is suitable for making small, fast, and everyday payments. Transfers can be done without knowing an employee’s bank account information. Only a unique UPI ID or your mobile number is required. UPI brings fast transactions, is easy to use, and you don’t need to log on to net banking. Its main advantage is helping friends send money to each other and make frequent payments.

Merchant Payments and Daily Micro-Transactions

UPI is the best option for buying groceries, getting food delivered, or recharging your mobile. This comes with QR code payment and is mostly recognized. Most of the time, IMPS is not applied because it takes more steps and is less flexible. In summary, when comparing IMPS vs UPI for everyday use, UPI comes out on top.

In India, the use of digital payments has rapidly increased in the last few years. IMPS and UPI are the two major solutions here. Immediate money transfers can be done through both services, but UPI is gaining more users.

UPI’s Rapid Growth and Widespread Adoption

UPI has become very popular as it is easy to use. With the help of Paytm, you can send or receive funds using a mobile number, UPI ID or even a QR code. Since users do not have to give their banking information, the app is more convenient. Due to its options for paying bills, handling transactions at stores and joining different accounts, UPI is now the number one choice for everyone.

IMPS’s Continued Relevance for Traditional Users

IMPS (Immediate Payment Service) has existed since 2010. Many still depend on it, especially people who like using traditional net banking or mobile banking. Transfers can be done at any time of day through account numbers and IFSC codes on IMPS. While it works well and fast, it still does not match UPI in terms of convenience and flexibility.

International Expansion of UPI

UPI’s popularity has grown worldwide. Singapore, Nepal, Europe, UAE, and France are among the countries that accept UPI payments. Being an international payment system is making UPI more popular when compared to IMPS.

Final Verdict: Choosing Between IMPS and UPI

Comparing IMPS vs UPI, these payment systems are trusted and considered reliable in India.

Cost, Speed, Security, and Convenience Comparison

IMPS is mainly reserved for transferring money between banks, and using it might attract small charges. You can use UPI without any fees to perform basic transactions. Both can be used fast, but UPI needs only your phone number or UPI ID for payment. IMPS ensures the safety of large transactions, whereas UPI requires an extra layer of protection during the transfer process.

Future Prospects for Digital Payments in India

Many apps and banks are supporting UPI as it has become more popular. It is predicted to become the most popular form of digital payment. IMPS will remain the choice for sending larger sums. To conclude, UPI is more convenient for everyday requirements; however, IMPS is best for transferring larger amounts.

FAQs

1. What is the difference between UPI and IMPS in banking?

A virtual payment address makes it possible to send money instantly using UPI, whereas IMPS requires one to know the account number and IFSC. UPI makes transactions easier than IMPS, although both are available 24 hours a day.

2. Is UPI safer than IMPS for transactions?

Because UPI has two-factor authentication and masks account numbers, it is secure enough to be used regularly. IMPS is still secure, but you need to provide more banking information, which might create a problem if that data is compromised.

3. Can UPI handle large transactions like IMPS?

Usually, UPI allows you to transact no more than ₹1–2 lakh each day, depending on your bank. IMPS generally handles higher limits, so it is appropriate for payments related to large deals, loans, and business matters.

4. Are there charges for using IMPS and UPI?

UPI is usually offered at no charge to its users. Charges may be minimal with IMPS, especially when you make transfers using a bank. Every bank sets its own fees, and they are less expensive than NEFT or RTGS charges.

5. Which platform is better for business payments—IMPS or UPI?

If making a small payment in a fast way, UPI is more convenient because it is easy to use and there are no transaction costs. If the business transaction involves a large amount of money, IMPS may be a reliable solution.

6. What does VPA mean in UPI?

A Virtual Payment Address is shortened as VPA. Since UPI uses your virtual ID, you cannot mistake your account details for money transfer, since other details are not shared.

7. Can I use IMPS without a smartphone?

Yes, you may send IMPS from your nearest bank, an ATM or by texting. It is useful for people who have basic phones or no internet, since it does not require a smartphone.

8. Are UPI transactions reversible if sent to the wrong person?

Wrong UPI transactions happen when funds are transferred to an unintended recipient due to human errors, malicious activities, or technical glitches. Still, reversal is possible if you follow some logical steps like contacting the unintended recipient, reporting the issue to your bank or UPI service provider, and finally lodging a complaint with the National Payments Corporation of India (NPCI).

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