NEFT vs UPI – What are the major benefits?

UPI (unified payments interface) is a kind of digital money transfer that has swiftly gained popularity currently. Alongside, the traditional option like NEFT (National Electronic Fund Transfer) has undergone considerable ameliorations to become efficient and faster than before. Banks also have either considerably lower NEFT charges or waive them completely. However, for understanding both money transfers, it is crucial to compare both routes.

NEFT vs UPI – Which is a better option?

Parameters NEFT UPI
Platform It is a process that is possible via mobile banking and net banking. It is a mobile-based application system that brings multiple bank accounts on a single platform for an effortless and unique fund transfer experience.
Transfer time It can take nearly 12 hours for the fund transfer. The fund is transferred immediately. This service is available 24X7.
The cost incurred in transferring Currently, no cost is incurred through the online platforms. Presently no cost is incurred. But few banks might charge Rs 0.5 per transaction.
Transfer initiation Should be initiated from the sender or remitter bank’s application. It can be initiated through any bank’s UPI app.
Type of transfer Just payment transactions can be done. Both collection and payment transactions can be done.
Per transaction limit No lower or upper limits The daily limit is Rs 1 lakh
Beneficiary details Requires IFSC code, bank account no. etc. Requires just virtual ID
Adding beneficiary Pre addition & bank’s approval of the beneficiary must be before transfer. Zero need of approval or pre addition of the beneficiary or transfer made to the beneficiary’s virtual ID

What are UPI benefits?

This is a hassle-free, fast, and cheapest way to transfer money, which you can do anytime from anywhere.

It requires only a single click authentication that includes just 2 factors.

It requires just the UPI ID for conducting transactions.

One does not require to store, share, or remember any of the sensitive info linked with the account.

You can simply link all your accounts to just one ID on the UPI app.

With the UPI application, you may not carry any cash. You can easily use the QR code scanner to make offline and online purchases.

You also can get payments from clients via this app’s collect payment route.

This permits fund settlement in real-time.

Any complaint that you have, you can raise directly to the UPI application.

What are the advantages of NEFT?

It is a cost-effective route of money transfer. However, a few minimal charges are included.

Available 24X7, including holidays.

There are zero requirements for any demand draft or cheque payments. You can easily make the payment online through NEFT.

This lowers the threat of dishonest theft and encashment. This is the safest money transfer method.

There is zero documentation in the NEFT process. This can be conducted through your bank’s application or via internet banking.

You will receive an instant transaction confirmation from both parties through SMS.

It is actualy one of the fastest ways to transfer your funds even though it should be done during the working hours of the bank only as money may be credited within half an hour time.

You can make NEFT transactions at any time from anywhere.

How can you make a UPI account?

UPI must be integrated with the banking applications of various banks. To properly use the UPI service, follow the below steps:

Visit the play store and install the UPI application of any of the banks of your choice.

Use your personal mobile number for registration.

On registration, you will receive a virtual address mapped with your phone. It will be unique for your account.

To make the transactions, you require a unique ID of the recipient. Anyone can use it – may it be a firm, merchant, delivery boy or shopkeeper.

There is no or zero minimum amount that one can transfer to anyone. The upper limit, however, is set to Rs 1 lakh.

Payment can be conducted between pals, to merchants and to the delivery boys in place of opting for cash on a delivery route.

Transfers through UPI can be done instantly.

How can you activate NEFT?

NEFT can simply be activated for your account once you activate the banking facilities online. For this, you must speak to your banking officials. If you already hold a savings account or any other account with the bank, your documents will be submitted, and the processing will begin. Once your internet banking gets activated, you can do the listed:

Log into your mobile or internet banking account

Press the tab ‘transfer funds’ and choose the NEFT option.

Go to the option add/manage beneficiary and then add the beneficiary details.

Enter all the details linked with your beneficiary’s name, IFSC code, account number of the branch.

Choose the account where you want to make the fund transfer

Place in the request for fund transfer. Once done, you will receive the transaction reference number.

Once the transfer is done, both beneficiary and you will receive the SMS alert.

Few FAQs

  • Can UPI be used to transfer funds from one account to another, same as NEFT?

Yes, you can use UPI to transfer funds from one account to another. This is known as the push money option.

  • What are NEFT and UPI?

A unified payment interface (UPI) is a digital mode of payment, which permits distinct accounts to use just one mobile application. This is a seamless podium facilitating real-time money transfer from any individual having an account with any bank branch.

  • Which fund transfer is better – NEFT or UPI?

Both the platforms have certain pros and cons attached. UPI facilitates instant fund transfer for free. However, it has a cap of a lakh per day. On the contrary, NEFT facilitates electronic fund transfer from any branch of the bank to any individual having an account with any bank branch. Also, there is zero capping on the NEFT transfers each day. However, its cost is way higher than UPI and may take up to 12 hours for 1 NEFT transfer.

  • Can you transfer the funds offline in UPI and NEFT?

Offline transfers can be done in the case of NEFT but not in the case of UPI.

  • For both – UPI and NEFT, what is the service timing?

Both NEFT and UPI transactions can be conducted any time, i.e., 24 X 7 for a period of 365 days.

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