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Difference Between Payout Modes: Wallet vs UPI vs NEFT vs RTGS vs IMPS

Difference Between Payout Modes: Wallet vs UPI vs NEFT vs RTGS vs IMPS

. 6 min read

The year 2020 has observed massive transitions in the operation of every sector. The revolution that has hit the financial industry has impelled the businesses to discard the traditional methods of financial transactions and take up fresh ways of undertaking business activities, and financial technology is consistently growing. According to one market survey, the financial technologies market reached 127.66 billion dollars in 2018, while we expect it to strike 309 billion dollars by the year 2022.

If you wish to start your own business, then you must be well-aware of technological updates and changes in the market. Being aware of emerging technologies is a prerequisite for achieving business success. Some emerging technologies of 2020 to deliver seamless financial services are as follows -

  • Artificial intelligence induced financial practices that will mitigate the risk of fraudulent activities, help manage risks, and identify a pattern in data to facilitate decision making without human interruption provide the ultimate consumer experience.
  • Reintroduction of chatbots that are now enabled with AI to provide technologically advanced services. It is estimated that 85% of businesses will adopt the system of a chatbot to interact with consumers by the end of the year 2020.
  • Blockchain will be the backbone of the financial industry as it will provide security and bring transparency in the system of operation. It is the most cost-effective method to keep track of transactions digitally.
  • Automation can reduce manual work and improve efficiency. It can save up to 30% of the cost of financial businesses. The data-intensive tasks can be handled with ease and accuracy while improving the overall productivity of the business.
  • Cloud computing is opening new gateways of easier reach to many consumers as more and more services are taking place in an online mode. With a convenient and user-friendly approach to digital management of financial practices, the demand for online platforms is soaring like never before.

The innovative transformation in technologies has also brought in various modes of payments like Wallet, UPI, NEFT, RTGS, and IMPS. An efficient entrepreneur must know the complete details of money management.

What is UPI?

Unified Payment Interface or UPI is a real-time payment method developed by the National Payment Corporation of India and is regulated by the Reserve Bank of India. This inter-bank transaction facilitates the instant transfer of money through your mobile phone. You just need to check whether your bank supports transactions via UPI. If it does support, then you have to download any UPI app from among BHIM by NPCI, Paytm, Google Pay, Phonepe, etc. and register with your mobile number, and then you will receive an OTP for verification. Set a four-digit password for access to your account. Finally, link the account with your bank and create a UPI PIN. You can create a UPI PIN by providing the last 6 digits of your debit card and its expiry date. Your account will be ready to receive and transfer payments.

What is a Wallet?

Quick and simple digital payment through your mobile phone, which is your virtual wallet is facilitating cashless transactions anytime, anywhere. Various apps support mobile payments. It stores your card details and reduces cash or card use every time you need to pay or receive a payment. Like a prepaid mobile phone, you can fill your wallet with your desired amount. The advanced techniques can recognise nearby ready-to-pay gateways called Near field communications (NFC). This technology allows transactions between two devices within a limited range.

What is NEFT?

National Electronic Fund Transfer backed by the Reserve of India is a nationwide payment system that allows inter-bank payments and funds transfer. In 2019, Dec RBI declared a new system for payment through NEFT. According to it, transactions can be carried on every day, including the holidays. In January 2020, RBI made it mandatory for banks not to charge any amount for NEFT transactions through a savings account. You can use NEFT for paying EMIs, credit-card bills, and fulfil all other fund transfer requirements within two hours.

What is RTGS?

Real-time gross settlements are an instant payment system for high-value amounts. This real-time model of the transfer’s minimum amount of transaction is Rs.2 lakh. Organisations can have the advantage of scheduling their payments so that employers receive and transfer payments in an organised way. For the online transfer, the consumer will require the beneficiary’s name, account number, IFSC code, bank, and branch name.

What is IMPS?

The immediate payment service by NPCI is a 24*7 system of payment. As the name suggests, it is a quick or instant mode for transferring money. It is a fast and secure way of transferring and receiving money. The minimum transfer amount is Rs.1 and a maximum of Rs. 2 lakh per day.  You can use both net bankings as well as mobile platforms for conducting transactions through IMPS.

According to the national payment corporation, UPI in August recorded a transaction of 1.62 billion, and UPI payments increased by 8%. IMPS is also expected to grow by 2021 at a 100% annual growth rate. RTGS transaction volume amounted to 150 million in the year 2019. Analysing all the data will enable you to make the right decision for channelling your business transactions. You must also know the distinction between the distinct features offered by these modes of payments.

Here are a few prominent features of the payment systems -

Wallet UPI NEFT RTGS IMPS
Instant transfer through virtual wallet in mobile phones with an overall transaction limit of Rs.1 lakh. An instant transaction that is extremely convenient but limits to a maximum transaction of rupees one lakh per day. The transfer is not instant. Transactions are settled in batches. However, there is no minimum transaction limit while the maximum limit is Rs. 10 lakh. Real-time transfer of larger amounts as the minimum transaction amount is Rs. 2 lakh. Instant transaction of smaller amounts as the maximum limit of the transaction is Rs. 2 lakh per day.
Works on phone numbers. Once you install the app, you have to provide the mobile number of the other party to whom you want to send the amount. Works with UPI IDs that you need to create when you link your bank account with the UPI app. Account details are needed for transactions that can be done through net banking or mobile banking. This legally backed transaction system requires all the account details of the beneficiary; the transaction is irreversible in the case of RTGS. This process of transaction requires account details. However, if you want to transfer money through a mobile, you will need the phone number and MMID, i.e., mobile money identifier of the receiver.
Electronic money transfers for on-the-go payments like shops, recharge bills, restaurant bills, or transferring money to a friend. Digital money transfer can be used for multiple purposes to pay or receive money instantly like bill payments, in-app purchases, over-the-counter payments, etc. NEFT can be used for credit card bill payments, EMI loan payments, foreign inward remittances, and lots more. Businesses generally use RTGS for safe transactions of the higher value of money. Other than transferring and receiving money, you can also check Aadhar linking status with your bank account.

Keep these tips in mind; it would help you in starting a business-

  1. Planning is the step to managing a business. Start with brainstorming a trendy business idea.
  2. A little research will go a long way. Analyse the market and look for every minute detail based on your idea.
  3. Get a certificate by undergoing training or course to buy the best knowledge in that field.
  4. Arrange funds for your business.
  5. Ensure digital presence through engaging website content.
  6. Finally, consider all the legal formalities to avoid any future disruption.

Conclusion

The ever-changing business environment becomes even more dynamic with the emergence of inventive technology. Keeping oneself updated is essential to compete in this digitally evolving market. The major payment methods are modified from time to time by its governing body. Knowing about the payment systems’ key features can help you decide on your transaction procedures for the business. The aspiring business owners must know the technological transitions occurring in the country to stay one step ahead of the competition. Certain tips based on facts will help future business owners to nurture their business systematically.

Also read:
Challenges Faced During Online Payments. How to Overcome Them?
Online Frauds: Online Scams in India
Best tips & tricks for Online Shopping