March 08, 2024

IMPS Payments Explained: Fast, Secure Money Transfers

Hello Readers!

Have you ever been in a rush to send money but the bank was closed? Well, thanks to IMPS, you can wave those worries goodbye! IMPS, or Immediate Payment Service, is a real blessing in the digital age, allowing us to transfer money instantly. But how does it work? Let's break it down.

What is IMPS?

IMPS is a revolutionary payment system in India that allows instant interbank electronic fund transfer, available 24/7, 365 days a year. Yes, even on holidays! It's fast, secure, and incredibly convenient.

How to Make an IMPS Payment?

Step 1: Access Your Banking Platform

You can access IMPS through various channels like mobile banking, internet banking, ATMs, or SMS. Just log in to your preferred banking platform.

Step 2: Choose IMPS

Once you're logged in, select the IMPS option for transferring funds.

Step 3: Enter Beneficiary Details

You'll need to enter the recipient's details:

• Their account number and bank's IFSC code, or
• Their mobile number and a 7-digit MMID (Mobile Money Identifier) code provided by their bank.

Step 4: Confirm the Transfer

After you've entered the details, input the amount you wish to transfer and confirm the transaction. You might need to authenticate the transaction with an OTP (One Time Password) sent to your mobile phone for security purposes.

Step 5: Instant Transfer

Once confirmed, the money is transferred instantly. Both you and the recipient will receive an SMS notification confirming the transaction.

Benefits of Using IMPS

• Speed: Transfers are completed instantly.
• Accessibility: Available round the clock, including holidays.
• Convenience: Can be done from anywhere using a mobile device or computer.
• Security: Highly secure, with multiple layers of authentication.

How Does IMPS Work?

While the frontend process is user-friendly and straightforward, the backend workings of IMPS involve complex banking networks and secure communication protocols. Here's a simplified explanation of what happens behind the scenes:

1. Initiation of Transaction: When you initiate an IMPS transfer, you log into your bank’s digital platform and enter the recipient's details along with the amount to be transferred.


2. Authentication: Your bank authenticates your transaction request. This typically involves entering a password or PIN and an OTP (One Time Password) that you receive on your registered mobile number.


3. Message Sent to IMPS Server: Once authenticated, your bank sends a message to the IMPS server operated by the National Payments Corporation of India (NPCI). This message contains encrypted details of the transaction, including the sender's account, the recipient's account or MMID, the amount, and a unique transaction ID.


4. NPCI’s Role: NPCI acts as the central authority that facilitates and settles IMPS transactions. It checks the details from the sender's bank against the recipient's bank details maintained in a centralized database.


5. Recipient Bank Verification: If the details match, NPCI routes the transaction to the recipient's bank for final verification. This step checks the validity of the account or MMID and ensures that the account is active and capable of receiving funds.


6. Debit and Credit: Upon successful verification, NPCI sends a message to the sender's bank to debit the specified amount from the sender's account. Simultaneously, the recipient's bank is instructed to credit the same amount to the recipient's account.


7. Transaction Confirmation: Once both banks confirm the debit and credit actions, NPCI finalizes the transaction. Both the sender and the recipient receive notification (usually via SMS) confirming the transaction's completion.


8. Settlement: At the end of the day, all the transactions are netted off, and the banks settle the cumulative amounts through their accounts with the Reserve Bank of India (RBI).

The entire process, although involving multiple steps, is automated and occurs within seconds, which is why the service is termed "Immediate Payment Service". The key to this speed is the robust IT infrastructure of NPCI and the banks' real-time response protocols, all designed to ensure security and efficiency.

IMPS typically allows you to transfer amounts up to INR 2 lakhs. However, some banks may have different limits, so it's wise to check with your bank. As for charges, they're nominal and vary from bank to bank.

IMPS has transformed the way we transfer money, making it a quick, hassle-free process. No more waiting for banking hours or transaction delays. With IMPS, your money moves as fast as your life does. So next time you need to send money in a jiffy, just IMPS it!

Remember, in the world of digital banking, IMPS is your financial expressway!