What is IMPS? Your guide to immediate payment service (IMPS) by Bajaj Finserv AMC

A key focus for banks and financial institutions is how fast and reliably money can move between accounts. In India, the Immediate Payment Service (IMPS) has emerged as a core part of the digital payments ecosystem, enabling payments that clear in real time, around the clock. IMPS works across banks and participating non-bank financial platforms, giving users more flexibility than older systems such as NEFT and RTGS.

IMPS was launched in 2010 by the National Payments Corporation of India (NPCI) to offer a robust, scalable electronic payment infrastructure for instant debit and credit between accounts. Over time, it has become an important factor of mobile and internet banking in India due to its speed, accessibility and ease of use.

Table of contents

• Definition and core functionality
• Instant transactions
• Key features of an IMPS transaction
• Advantages of using IMPS for fund transfers
• How to transfer funds through IMPS: A step-by-step guide
• IMPS vs. NEFT vs. RTGS: Choosing a suitable fund transfer method
• Security measures and best practices for IMPS transactions

Definition and core functionality

IMPS is essentially an online money transfer service that allows users to transfer money between accounts in different banks within seconds after verification and initiation by the sender.

Unlike traditional bank transfers, which may take hours or even days (in some instances), IMPS has no wait time and also allows transfer capabilities from the following sources: mobile banking, internet banking, SMS banking and USSD (Unstructured Supplementary Service Data) using a basic phone.

When you use IMPS, you may provide either an MMID (Mobile Money Identifier) or your complete account number (plus IFSC i.e., Indian Financial System Code) to enable an instant transaction.

Instant transactions

Digital convenience has now become a way of life for all aspects of people’s finances. Today, we can use IMPS to instantly pay a friend back, send money to a family member, or transfer funds to a merchant. This can be very useful for someone in need of an urgent payment or any instant transaction. Usually, the cash is credited to the recipient's bank account within minutes, at which point a notification via SMS is sent to the sender, confirming transaction success.

Also Read: Cash vs UPI: The Psychology Behind Spending Habits

Key features of an IMPS transaction

IMPS is designed to make fund transfers fast, flexible, and widely accessible for everyday banking needs, whether you are sending money late at night or transferring funds across different banks. At the same time, IMPS transactions operate within defined limits and charges set by banks, balancing ease of use with security. Understanding these key features may help you use IMPS more efficiently.

24/7 availability and interbank transfers

One major advantage of IMPS is its accessibility. Previously, many ways of transferring money involved batching and were restricted to certain hours of the day. But with IMPS, you can initiate a transfer at any time. In addition, as long as both your sending bank and your receiving bank belong to the IMPS network, you may send funds via IMPS between banks.

Transaction limits and charges

Reserve Bank of India has permitted IMPS transactions of up to Rs. 5 lakh per transaction. However, individual banks and platforms typically set their own transaction limits (within the Rs. 5 lakh ceiling). These limits are designed with an aim to balance convenience and security. Some banks may offer IMPS free of cost up to certain thresholds, while others may levy a small nominal fee per transaction, especially for high volumes of use or third-party apps.

You may check with your bank regarding updated IMPS charges and daily transfer limits.

Also Read: OTM in Mutual Funds: Full Form, Meaning and Benefits

Advantages of using IMPS for fund transfers

IMPS offers several benefits such as:

• All the transactions are completed almost instantly.
• IMPS is available 24×7, even on holidays.
• This feature is accessible via mobile, internet, and other digital channels.
• IMPS works across banks and financial platforms.
• Instant confirmations via SMS or app alert are provided.

How to transfer funds through IMPS: A step-by-step guide

Prerequisites for IMPS transactions

To make an IMPS transfer, you typically require:

• A valid bank account with internet banking enabled.
• Beneficiary details such as account number and IFSC code, or Mobile Money Identifier (MMID) and mobile number.

Using MMID for IMPS transfers

A few banks provide their customers with a Mobile Money Identifier (MMID), which is a unique 7-digit identification number linked to your mobile phone number and bank account. If both you and the individual you want to pay have an MMID from the respective banks, you may use mobile number + MMID together to facilitate an IMPS transaction.

Here are the steps you may follow:

• Log in to your Internet banking app.
• Choose IMPS as the transfer option.
• Enter the beneficiary’s information.
• Enter the amount you want to send.
• Authorise with your bank credentials or with OTP.
• Submit your transaction.

When the transaction is completed, you will be sent a message confirming your transaction with an assigned reference number.

Also Read: E-Mandate/Autopay in Mutual Fund

IMPS vs. NEFT vs. RTGS: Choosing a suitable fund transfer method

Understanding how IMPS compares to other payment systems may help in choosing the suitable method:

• IMPS (Immediate Payment Service): Instant, available 24/7, suitable for most everyday transfers.
• NEFT (National Electronic Funds Transfer): Historically processed in batches, though now available round-the-clock in many cases. Suited for larger payments when immediacy is not needed.
• RTGS (Real-Time Gross Settlement): Designed for high-value transactions and settles individually in real time; often requires minimum amounts of Rs. 2 lakh.

In general, for smaller to mid-sized transfers where speed is needed without minimum thresholds, IMPS may be a convenient option.

Security measures and best practices for IMPS transactions

While IMPS is fast and convenient, secure use is deemed important:

• You may want to avoid using public Wi-Fi for transactions.
• You could enable two-factor authentication for banking apps.
• Confirm beneficiary details before confirming transfers.
• You may regularly review bank SMS or email alerts.

Banks employ secure encryption and verification systems, but users are advised to remain vigilant to protect credentials and devices.

Frequently Asked Questions

What is the minimum amount for an IMPS transaction?

In India, the minimum amount for an IMPS transaction is typically Rs. 1, as per the IMPS system framework. However, individual banks may set their own minimum limits.

Can I reverse an IMPS transaction if I send money to the wrong account?

No. Because IMPS transfers complete instantly, they generally cannot be reversed once processed. You could contact your bank immediately if you believe an error has occurred.

Do all banks support IMPS?

Most Indian banks and many financial institutions participate in the IMPS network, but not every institution may offer it. You may want to verify with your bank whether IMPS is enabled.

Is it necessary to register a beneficiary for IMPS transfers?

Some banks require beneficiary registration before the first transfer, while others allow one-time setups at the time of payment. This depends on the individual bank’s security policies.

What should I do if my IMPS transaction fails?

If a transaction does not go through, you may check for:

• SMS confirmation.
• Balance deduction.
• Transaction status on the app or the digital platform.

If the amount was debited but not credited, you could contact your bank with the transaction reference number for resolution.

Are there any specific mobile apps recommended for IMPS?

There are no specific apps recommended for IMPS transfers. Any bank’s official mobile or internet banking app that supports IMPS can be used. In addition, some licensed payment apps offer IMPS transfers through linked bank accounts, subject to their terms and bank integration.