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The Unified Payment Interface (UPI), rolled out in 2016, and Immediate Payment Service (IMPS), launched in 2010, are instant fund transfer systems. These differ in the way funds are transferred.
Banks set a daily limit of Rs 1 lakh for UPI transfers. However, for transactions such as income tax payments, the limit can be increased to Rs 5 lakh. Conversely, the daily transaction cap for IMPS is Rs 5 lakh.
The IMPS method of transferring funds operates similarly to the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems. In a UPI fund transfer, the sender only requires the recipient’s virtual address.
The IMPS process can be time-consuming as compared to UPI. It requires all the necessary details of the receiver to execute the transfer. The UPI on the other hand can transfer funds easily as it requires only the receiver’s virtual address and no prior registration. It also supports QR code-based payments, therefore, making it easier for users.
The transaction cost of IMPS is slightly higher than the UPI. For instance, HDFC Bank levies charges up to Rs 15 plus tax. These fees vary between banks. UPI transactions are generally free or incur minimal costs.
UPI has a two-factor authentication while IMPS does not require it. A user can transfer the money to another party via IMPS by entering the MPIN.
Compiled by Syed Muskan