How to Analyse the Difference Between UPI and IMPS

The landscape of digital payments in India has transformed dramatically over the last decade. With the growth of internet access and the increasing penetration of smartphones, digital payment solutions have become an integral part of everyday transactions. Among the many options available, UPI (Unified Payments Interface) and IMPS (Immediate Payment Service) are two of the most popular methods that allow users to transfer money quickly and securely. But what exactly is the difference between IMPS and UPI, and which should you use?

In this blog, we will explore the key differences between UPI and IMPS, understand how each works, and identify the scenarios where one is more beneficial than the other.

What is IMPS?

IMPS (Immediate Payment Service) is an instant, real-time payment service that allows you to transfer money 24/7. The National Payments Corporation of India (NPCI) launched it in 2010 to provide a safe and efficient system for interbank money transfers, even on public holidays.

Key Features of IMPS

• Real-time money transfer: IMPS offers immediate fund transfers between bank accounts, ensuring recipients receive money instantly.
• Available 24/7: Unlike NEFT (National Electronic Funds Transfer), which used to work only during banking hours, IMPS can be used at any time, day or night.
• Multiple access points: Users can access IMPS via internet banking, mobile banking, ATMs, and SMS services.
• Transaction limits: IMPS allows transactions from ₹1 up to ₹2 lakhs per day (this limit can vary depending on the bank).

IMPS operates using unique identifiers, such as a mobile number and MMID (Mobile Money Identifier) or an account number and IFSC code. This flexibility makes it an effective solution for securely transferring money between banks.

What is UPI?

UPI (Unified Payments Interface) is another real-time payment system developed by NPCI. Launched in 2016, UPI revolutionised the way people transact by linking multiple bank accounts to a single mobile application and providing a simple, user-friendly interface for sending and receiving money.

Key Features of UPI

• Link multiple bank accounts: With UPI, users can link several bank accounts to a single app, enabling seamless transfers without the need to switch between apps.
• VPA (Virtual Payment Address): To simplify transactions, UPI uses a VPA, such as “name@bank,” instead of an account number and IFSC code.
• Immediate transfers: Like IMPS, UPI also facilitates instant fund transfers.
• Additional services: UPI allows bill payments, QR code-based payments, and peer-to-peer (P2P) requests, making it more versatile.
• No transaction limit for merchants: While person-to-person transactions have a limit of ₹1 lakh per transaction, UPI allows higher limits for merchant transactions, which makes it ideal for businesses.

UPI has significantly changed the landscape of digital payments in India due to its simplicity, security, and wide adoption. With just a few taps, users can make payments without having to remember bank details, which makes it one of the most convenient options available today.

Difference between UPI and IMPS

Now that we have a clear understanding of IMPS and UPI, let’s break down the key differences between the two in the table below:

When to Use IMPS and UPI?

Use IMPS when:

1. You need to transfer larger sums of money: While UPI has a transaction limit of ₹1 lakh for personal transfers, IMPS allows transfers up to ₹2 lakhs.
2. Bank account details are known: If you have the account number and IFSC code of the recipient, IMPS can be a reliable option.
3. You want to use alternative channels: If you’re using an ATM or SMS service to transfer funds, IMPS offers these functionalities, unlike UPI, which is mainly mobile-app-based.

Use UPI when:

• You prefer convenience: UPI’s ease of use is unparalleled. With VPAs, there’s no need to remember long account numbers or IFSC codes.
• You need more services: UPI offers more than just fund transfers. You can pay bills, scan QR codes for merchant payments, and even request money from someone.
• You’re dealing with small to medium transactions: UPI is best for everyday transactions, especially for amounts up to ₹1 lakh.

Advantages of UPI Over IMPS

While both IMPS and UPI provide instant fund transfers, UPI has several advantages that make it more user-friendly:

1. Simpler User Interface: UPI offers a cleaner, less complex way of transferring money, as users don’t have to deal with account numbers or IFSC codes.
2. Wide Integration: UPI is integrated with multiple apps such as Google Pay, PhonePe, and Paytm, allowing users more flexibility.
3. Additional Features: In addition to transferring funds, UPI can be used for bill payments, UPI-to-UPI requests, and merchant transactions.
4. Unified Platform: With UPI, users can link multiple bank accounts in one app, simplifying the process of managing money from different accounts.

Conclusion

Both IMPS and UPI are powerful digital payment tools that have significantly contributed to India’s growing cashless economy. However, while IMPS provides a reliable option for transferring larger amounts and offers versatility in terms of access points, UPI stands out for its simplicity, flexibility, and range of services. The difference between IMPS and UPI lies mainly in ease of use, transaction limits, and additional features, with UPI being the preferred choice for most day-to-day transactions.

Whether you choose to use IMPS or UPI depends on your specific needs. IMPS is ideal for larger, more formal transfers, whereas UPI is the preferred method for everyday payments and ease of use.

FAQs

1. What is the main difference between IMPS and UPI?

The main difference between IMPS and UPI lies in their usage and interface. UPI uses virtual payment addresses (VPAs) and is primarily mobile app-based, whereas IMPS requires account numbers that can be accessed through various banking channels.

2. Can I use IMPS and UPI for transferring money at any time?

Yes, both UPI and IMPS are available 24/7, allowing users to make transfers at any time, including on holidays and weekends.

3. Which is faster, UPI or IMPS?

Both UPI and IMPS offer real-time, instant transfers, so there’s no significant difference in speed.

4. Are there any charges for using either of the fund transfer methods?

Many banks offer UPI transfers for free, while IMPS may have nominal charges depending on your bank’s policy.