Why Do People Prefer Net Banking for Digital Transfers Despite NEFT and RTGS?
When it comes to digital fund transfers, people have various options available to them, including NEFT (National Electronic Fund Transfer), RTGS (Real Time Gross Settlement), and IMPS (Immediate Payment System). Despite these options, many individuals still choose to use their net banking for transactions. This article explores the reasons behind this preference and highlights the key features of NEFT and RTGS to provide clarity on when and why to choose each.
Understanding Digital Payment Systems: NEFT and RTGS
Both NEFT and RTGS are digital payment systems regulated by the Reserve Bank of India (RBI). Each system has its unique features and is ideal for different types of transactions.
RTGS: A Fast and Secure Payment System
RTGS stands for Real Time Gross Settlement and targets high-value transactions, typically exceeding Rs. 2 lakh. Its key characteristics are:
Real-time Settlement: Transactions are processed instantly, providing immediate confirmation of the payment arrival. High Transaction Values: Minimum transaction value is Rs. 2 lakh, and there are no maximum limits. Time-restricted: Operations are conducted only during bank working hours, not 24/7. For Corporates and High-value Transactions Only: Mobile wallet companies like MobiKwik and Paytm do not have access to this system.Given these characteristics, RTGS is better suited for large, high-value transactions that require instant confirmation and security.
NEFT: A Cost-effective and Netting System for Smaller Transactions
NEFT, or National Electronic Fund Transfer, is designed for bank-to-bank transactions and has the following features:
Bulk Transactions: NEFT processes a batch of transactions at a time, with settlements every 30 minutes. For Low-value Transactions: This system is more appropriate for smaller transactions as it is not designed for large, one-time transfers. 24/7 Availability: While RTGS operates during working hours, NEFT operates continuously, ensuring transfers can be made even outside standard banking hours. Bank-to-Bank Settlement: Transactions are cleared between banks, not directly from one individual to another.For instance, if an SBI customer withdraws Rs. 5 lakh from an Axis Bank ATM and an Axis Bank customer withdraws Rs. 2 lakh from an SBI ATM, NEFT facilitates the settlement of Rs. 3 lakh between the banks.
NET Banking: A Comprehensive and User-friendly Solution
Despite NEFT and RTGS being reliable options, many individuals and businesses prefer to use net banking for various reasons:
Easy Registration and Usage: Interested individuals can easily sign up for net banking and add beneficiaries, making the process accessible and user-friendly. 24/7 Availability: Net banking apps are available 24/7, ensuring that users can manage their finances at any time. Immediate Additions: Once registered, users can add the name of a beneficiary and start transferring money immediately, without waiting for the beneficiary to be added manually. Cost-Effective: Online transfers through net banking are generally more cost-effective compared to traditional methods. Reliability and Security: Net banks offer robust security measures and reliable transaction tracking, providing peace of mind to users.Furthermore, digital payment apps such as SBI's Yono, Axis Bank's Axis Pay, and the NPCI's BHIM app are built on Unified Payment Interface (UPI) and provide similar benefits to net banking. These apps offer a seamless user experience, allowing for instant and secure transactions.
Conclusion
While NEFT and RTGS offer significant benefits, many people prefer net banking for digital transfers due to its ease of use, 24/7 availability, and cost-effectiveness. Each payment system has its place, and the choice depends on the transaction's value and the desired level of immediacy and security.