Introduced in 201o, the immediate payment service or IMPS is, as its name suggests, a system of “quick payments”. It provides a 24/7 instant national money transfer service. 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 organization for operating retail payment and settlement systems in India, through its existing NFS switch.

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

One can transfer money through IMPS using various channels like internet banking, mobile banking apps, bank branches, ATMs, SMS and interactive voice response system i.e. IVRS. In addition to banks, the system allows non-banking entities such as issuers of prepaid payment instruments (PPIs) to participate and facilitate fund transfers from wallets to receiving bank accounts.

Currently, IMPS person-to-person (P2P) funds transfer requires the sender to complete the transfer using the recipient’s mobile phone number and mobile money identifier or MMID.

The sender and receiver must link their mobile phone numbers to their respective bank accounts and obtain an MMID, in order to send or receive funds using IMPS.

Initially, the system required the sender and recipient to be registered for mobile banking, which hindered growth. Therefore, the system has been upgraded to allow the transfer of funds using other parameters such as account number and IFSC code or using the Aadhaar number linked to the bank account.

Any entity with a valid bank or prepaid payment instrument (PPI) license 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 onward to beneficiary bank only after the remitting bank has debited the account of the remitting customer. Therefore, the risk that a remittance is made when the remitting client does not have sufficient funds is taken into account.

Currently, 644 members are live on IMPS, including banks and PPIs. The limit per transaction in IMPS, effective since January 2014, has been capped at ₹2 lakh for channels other than SMS and IVRS.

The RBI, in view of the importance of the IMPS system in processing domestic payment transactions, increased the limit per transaction from ₹2 lakh to ₹5 lakh for channels other than SMS and IVRS in October 2021.

With RTGS becoming operational around the clock, there has been a corresponding increase in IMPS settlement cycles, thereby reducing credit and settlement risks. The number of monthly IMPS transactions has also increased from 248 million to 420 million in two years.

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