IMPS versus UPI

If one has moved or transferred money from their account to someone else's, they are likely to be familiar with IMPS and UPI – two of the most popular payment methods in India. Since IMPS debuted in 2010 and UPI followed suit in 2016, they've become the go-to option for quick and easy transactions. Each boasts its own unique features and benefits, as well as distinct working mechanisms. Let's dive into the details and help you understand these digital payment options with ease.

The Pioneer of Instant Payments – IMPS

IMPS has earned a reputation for speed and reliability. Since its launch in 2010, this service has enabled round-the-clock interbank electronic fund transfers. As of June 2024, IMPS allows one to transfer funds up to INR 5 lakhs instantly through various methods like mobile banking, NetBanking, and ATMs. However, the maximum limit can vary depending on the bank. Built on the principles of speed and simplicity, IMPS ensures that the transactions are processed in real-time, any time of day. IMPS leverages MMID (Mobile Money Identifier) and phone numbers to allow customers to send money immediately.

The New Age of Payment Simplicity - UPI

On the flip side, UPI, launched by the National Payments Corporation of India (NPCI) in 2016, has swiftly become the preferred platform for peer-to-peer and merchant transactions. UPI streamlines the process by allowing you to link a bank account to a single UPI ID, eliminating the need to enter bank account information for each transaction. With a transaction limit of up to INR 1 lakh per transaction, as set by NPCI, UPI is perfect for smaller payments and daily expenses.

Whether using payment apps or your bank's app, users can transfer money easily with their UPI ID.

Features Face-off

When it comes to features, both platforms offer 24/7 availability, but UPI stands out with its user-friendly interface and the convenience of linking multiple bank accounts to one UPI ID. This is a game-changer for those who manage multiple accounts and prefer a streamlined approach to their transactions.

Working Mechanisms Unveiled

Understanding how IMPS and UPI operate can help you choose the best option for your needs.

As we have seen, IMPS facilitates secure transactions by using an MMID or an IFSC code along with the beneficiary's mobile number or account details. This adds a layer of security, ensuring that only the intended recipient receives the funds. However, it also introduces some complexity, as users must enter detailed information, such as the account number and IFSC code, for each transaction. This process, while secure, can be somewhat cumbersome, especially for new users or those making frequent transactions.

UPI, on the other hand, speeds the transaction process with its Virtual Payment Address (VPA) system. Instead of entering sensitive bank details, users create a unique VPA, which acts as an alias for their bank account. This VPA can be used to send and receive money without revealing any confidential information. The simplicity of UPI lies in its user-friendly approach – you only need the recipient's VPA to complete a transaction. This method not only streamlines the process but also enhances security by keeping bank details private.

IMPS’s approach adds an extra layer of security through detailed verification, which can be advantageous for those prioritising security over convenience. Conversely, UPI’s streamlined process offers a blend of ease and security, making it an attractive choice for everyday transactions. By understanding these mechanisms, users can make informed decisions based on their transaction needs and comfort with technology.

Which One to Choose?

Ultimately, the choice between IMPS and UPI depends on the specific needs. If one is looking for higher transaction limits, IMPS is the ally. But at times, the convenience, ease of use, and cost-effectiveness can make UPI the winner!

To learn more about digital payments and solutions that you can leverage, check out our blogs