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Introduction to IMPS Full Form:
Most people know about NETS and NEFT, but have you heard of IMPS? What is IMPS full form? Immediate Payment Service is IMPS full form. It is a real-time interbank electronic funds transfer system available to the masses across all major banks in India.
It has brought about a paradigm shift in our financial transactions as we can now send money instantly without worrying about time lags or cumbersome procedures.
The IMPS allows all banks nationwide to process transactions using only their own infrastructure, reducing dependency on external network providers like Visa or MasterCard.
The number of transactions using IMPS has grown rapidly over the years due to its convenience, security, and speed of execution. As per NPCI, approximately 50 crore transactions were recorded through IMPS in March 2023.
What is IMPS?
IMPS is a 24×7, real-time electronic fund transfer service that individuals, businesses, and corporates can use for domestic and international payments. The RBI regulates its ecosystem. RBI has introduced strict regulations for all players in the ecosystem, such as banks, payment gateways, and merchants.
The feature of UPI (Unified Payments Interface) has been built based on IMPS. That is, IMPS acts as the architectural base of UPI. IIT Madras and IDRBT have built these systems.
In November 2010, IMPS enabled low-cost transactions with minimal risk and was designed to provide a faster mechanism.
Most banks have their own mobile apps through which users can access the function of IMPS to transfer money. Merchants use various payment gateways to streamline and use the IMPS system.
To register, customers need to activate mobile banking services provided by their banks.
While registering, they will also receive an MMID, a 7-digit unique code issued by their bank, which is used to receive money through IMPS. The customer generates the MPIN, a four-digit password, to ensure the security of their mobile banking transactions.
IMPS and Financial Inclusion
According to RBI data, a large Indian population is underbanked or unbaked, especially those in rural areas. This means they cannot access formal banking services such as savings accounts, debit cards, etc.
Here’s how IMPS has made a positive impact:
1. Accessibility
2. Financial Inclusion
3. Cost Savings
4. Empowerment and Convenience
For example, consider a farmer who used to travel from his village to a city to trade his products. He can receive payments directly into his bank account using IMPS.
With IMPS, transfers can be made through mobile smartphone apps, as well as through SMS or USSD. This enables individuals without direct access to bank branches or ATMs to conveniently and securely conduct fast transactions.
IMPS in Retail and Small Businesses
It has brought about several applications that simplify transaction management for business owners.
- Checking transaction status: Business owners can easily verify the progress of their transactions by initiating a status check request.
- Name inquiry: Businesses can inquire about recipient details, such as account number, IFSC code, MMID, and mobile number, ensuring accurate transactions.IMPS has played a vital role in the growth and efficiency of small businesses in India. Here are some examples of its impact:
- Improved efficiency: Small businesses no longer have to wait for days or weeks to receive customer payments, enabling them to utilize their time and resources more effectively.
- Reduced transaction costs: Real-time settlement through IMPS eliminates settlement risk for both parties, resulting in significant cost reductions for businesses.
- Swift settlements: IMPS facilitates faster settlements for retailers compared to cash transactions or checks, allowing for smoother business operations.
IMPS and Government Initiatives
IMPS is a key component of India’s efforts to modernize its payments infrastructure. The service supports social welfare programs like pensions and scholarships and financial inclusion efforts like Jan Dhan Yojana (JDY).
IMPS has helped reduce fraud and leakages in social welfare programs by making it impossible for middlemen to siphon funds away from intended beneficiaries. For example, when the government provided cooking gas subsidies via electronic transfer, many people could receive their monthly allowance.
Security and Privacy Measures in IMPS
Security is a top priority when it comes to electronic fund transfers. IMPS incorporates several security measures to protect users’ financial information and ensure safe transactions. These measures include:
- MPIN authentication: Every IMPS transaction requires the user to enter their MPIN, which acts as a password to authorize the transfer.
- Encryption: IMPS transactions are encrypted, ensuring that sensitive data is securely transmitted.
- Two-factor authentication: These days, banks implement 2FA to add another layer of security for the users.
To stay safe while using IMPS due to scalability and infrastructure issues. here are some tips:
- Protect Personal Information
- Secure Devices and Networks
- Use Secure Apps and Platforms
- Enable Security Features
- Monitor Transactions and Account Activity
Future Innovations and Challenges for IMPS
Future innovations under IMPS will need to address issues most IMPS users face. These are:
1) Does not support a large number of transactions per second.
2) Does not support interoperability with other payment systems or networks.
3) Does not support multiple currencies
The most recent improvement was in 2016 with the introduction of the Unified Payments Interface (UPI). UPI allows users to make payments directly from their bank accounts without going through third-party applications such as Paytm or Phonepe.
There are also efforts to allow users to send money internationally at a lower cost than they would pay today. This would be done by creating a payment channel between the two countries.
Payments apps like Paytm, PhonePe, etc., can compete with IMPS. However, they require users to create and manage an in-app wallet. Thus, Indian users are not very keen on these apps. ‘
IMPS for Digital India
IMPS, or Immediate Payment Service, has revolutionized how money is transferred in India. Its primary features include real-time transactions and accessibility through multiple channels. IMPS has become a preferred choice for individuals and businesses alike.
By registering for IMPS and understanding its features and benefits, you can use this instant fund transfer service to streamline your financial transactions. If you already have a bank account, you can easily opt for IMPS and take advantage of instantaneous transactions.
Learn more about some other full forms:
| NBFC Full Form | PF Full Form |
| UTR Full Form | BSF Full Form |
| NPCI Full Form | APBS Full Form |
| GNP Full Form | GPF Full Form |
| FII Full Form | IDBI Full Form |
IMPS Full Form: FAQs
What is IMPS, and how does it work?
IMPS full form is Immediate Payment Service. It is a system of making transactions from one bank account to another within the Indian banking system.
What is IMPS used for?
IMPS is used for instant payments at any time throughout the year.
What is the difference between IMPS and NEFT?
IMPS is for instant transfer. NEFT works similarly to IMPS but takes longer to make the payment. Also, the rate of charges for transactions in IMPS and NEFT differ.
Are IMPS free?
For an inward transaction, no fee is charged. However, for an interbank transaction, a nominal fee might be charged.
Can IMPS be tracked?
Yes, all the details of an IMPS transaction made by you can be tracked through Internet Banking.
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