What is IMPS?

 

Introduced in 201o, Immediate Payment Service or IMPS, is -- as the name suggests -- a ‘fast payments’ system. It provides 24x7 instant domestic funds transfer facility. India was the fourth country after South Korea, South Africa and the United Kingdom to introduce it.

 

This facility is provided by the National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, through its existing NFS switch.

The system provides for real time transfer of funds between the remitter and beneficiary with a deferred net settlement between banks.

 

One can transfer money via IMPS by using various channels like internet banking, mobile banking apps, bank branches, ATMs, SMS and Interactive Voice Response System, i.e. IVRS. Besides banks, the system allows non-bank entities such as Prepaid Payment Instrument (PPI) issuers to participate and facilitate remittances from wallets to the recipient bank accounts

Presently, IMPS person-to-person (P2P) funds transfer requires the remitter to make the transfer using the Beneficiary Mobile Number and Mobile Money Identifier or MMID.

 

Both remitter and the beneficiary need to link their mobile numbers with their respective bank accounts and get MMID, in order to send or receive funds using IMPS.

Initially, the system required both the remitter and the beneficiary to be registered for mobile banking which was inhibiting the growth. Hence, the system was upgraded to enable remittance of funds by using other parameters such as account number and IFSC code or by using bank account linked Aadhaar number.

 

Any entity with a valid banking or prepaid payment instrument (PPI) licence from the Reserve Bank of India is eligible to participate in IMPS.

 

In IMPS, a transaction is received at National Payments Corporation of India or NPCI for routing to the beneficiary bank only after the remitting bank has debited the remitting customer’s account. Therefore, the risk of a remittance being made with the remitting customer not having adequate funds is addressed.

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