New IMPS money transfer rule:
Soon, send up to Rs 5 lakh with mobile no., bank name; no need to add beneficiary, account, IFSC
Oct 17, 2023
Synopsis
NPCI has simplified Immediate Payment Service (IMPS) to make bank account transfers easier and error-free. You can just use the mobile number and bank account name of the receiver or beneficiary to send money. Soon, you will be able to send up to Rs 5 lakh can be transferred through simplified IMPS without adding a beneficiary. NPCI says that this payment experience will be accompanied by real-time beneficiary name validation. How will the new simplified IMPS work and how it will benefit you. Read on to find out.
Soon, you will be able to transfer up to Rs 5 lakh from one bank account to another without adding a beneficiary. The National Payments Corporation of India (NPCI) has simplified Immediate Payment Service (IMPS) to make bank account transfers easier and error-free. You can just use the mobile number and bank account name of the receiver or beneficiary to send money, says the NPCI. How will it work? Where will your money go if you hold two accounts in a bank? ET Online breaks down the new simplified IMPS and its workflow for you.
Bank account fund transfer: How IMPS works
There are two types of payments allowed under IMPS — a) person-to-account payment — where you have to use the bank account number, bank name, and IFSC code of the bank to transfer money; b) person-to-person payment — where you have to use the mobile number and a mobile money identifier (MMID) to identify a beneficiary while sending money from one bank account to another. MMID is a unique seven-digit number issued by banks to their customers for access to mobile banking services. Each mobile banking account is assigned a distinct MMID by the respective bank.
To send money through IMPS using MMID, both the sender and the receiver should have MMIDs for their bank accounts. Further, you need to know the receiver's MMID to transfer money through IMPS. "This person-to-person payment is not popular because of the need to know the MMID to initiate the transaction. Even though banks follow a standard pattern for MMID, most of the customers are unaware of their MMIDs and hence most of the customers prefer person-to-account payments over person-to-person payments," says Sumoth C, Vice President & Head - Digital, Federal Bank.
New simplified IMPS: What NPCI has proposed?
NPCI has recently announced: "The simplification of the IMPS user journey on banking channels like Mobile Banking, Internet Banking, etc. Users will now be able to transact by entering just the beneficiary’s mobile number and bank name. This payment experience will be accompanied by real-time beneficiary name validation. "
The new simplified IMPS is nothing but a more streamlined version of IMPS person-to-person payments using mobile numbers and MMIDs, says Sanjeev Moghe, President and head — Cards and Payments, at ICICI Bank. While sending money, the sender will now enter or select the receiver's mobile number and bank name from the list of the banks enabled on the flow, instead of entering the unique MMID, he explains.
How much can you send through simplified IMPS?
NPCI says that up to Rs 5 lakh can be transferred through simplified IMPS without adding a beneficiary. "The simplified IMPS fund transfer journey can be extended to retail as well as corporate for bulk transaction use cases," NPCI says. Now the upper limit will vary from one bank to another, depending on their policies. Sumoth C, says, "Banks usually provide two payment options within their apps/net banking: 1) Quick pay and 2) Transfer to the beneficiary. Under the quick pay option, customers can manually enter the beneficiary details and amount to make payment. Under this fund transfer option, the limit will be capped and is primarily used for small-value ad-hoc payments. Under fund transfer to the beneficiary, the customer will be allowed to make high-value payments to already added and verified beneficiaries. The beneficiary validation will be implemented in both the quick pay and beneficiary addition and is for verifying the name of the recipient before submitting the payment."
When can you use the new simplified IMPS?
Banks are yet to roll out this new feature. Sumoth C of Federal Bank says, "Banks are in the various stages of going live. Federal Bank is almost ready as a beneficiary bank and the changes are expected to go live by this week. As a remitter, some more time is required to make changes."
IMPS real-time beneficiary validation: How will it work?
At present, before sending the money, when you enter the details, there is no way to check in real-time whether the details belong to the intended sender or not. However, the new addition of simplified IMPS real-time beneficiary validation feature will help the remitter to cross-check the name in the bank’s record and ensure that payment is made to the intended beneficiary only. As the new simplified IMPS now supports beneficiary name validation in the XML platform, the sender will be able to see the beneficiary’s name before authorising a transaction, says Moghe. "A real-time name validation will confirm if the entered bank account or mobile indeed belongs to the intended beneficiary," says Mrigank Shekhar, Chief Product Officer, Niyo.
This will add safety to the new simplified feature. "This feature is all the more important in simplified flow since the mobile number is the only parameter used to identify the beneficiary. Without this, it is risky as even a minor mistake made by the remitter while entering the mobile number may lead to funds getting credited to unintended beneficiaries," says Sumoth C.
Do remember that the introduction of the beneficiary name validation does not necessarily mean that the cooling period, usually 30 minutes, for beneficiary addition will no longer exist. While you add a new beneficiary now, you have to wait for some time before doing the first transaction. "The cooling period will remain the same, however, you will have the option to crosscheck and confirm the beneficiary details before sending funds," Mandar Agashe, Founder & MD at Sarvatra Technologies.
What happens if two accounts are linked with one mobile number?
As the mobile number will be the main identifier in the new simplified IMPS option, where will the money go if two bank accounts are linked with the same mobile number? Answering this, Ajay Rajan, Country Head, Digital and Transaction Banking, at YES Bank, says, "In the scenario where multiple accounts are linked to the same mobile number, the beneficiary bank will designate one account as the primary account for receiving funds."
Moreover, banks will offer the option to bank accountholders to select the primary account or default account to receive such money. "Additionally, the beneficiary bank should have a provision for the beneficiary to change their primary account to another one and allow the credit of funds in the newly selected primary account. This flexibility ensures that beneficiaries have control over the account where they receive their funds," Rajan adds.
Sumoth C of Federal Bank mentions, "Banks will first go live with this simplified flow for customers having only one operative account in a bank and later introduce the option to set default accounts or some other solution to accommodate customers having multiple operative accounts also in this new simplified flow."
Simplified IMPS: How will it help the customers?
Pointing out the benefits of the new simplified IMPS, Sumoth C, says, "Mobile number is a very well-known identifier and a payment method which requires only mobile number and bank name which will be much easier as compared to any other payment modes with lesser known parameters like a/c number, IFSC or MMID as input."
With UPI, people mostly use mobile numbers to make payments. "Through simplified flow, a similar facility is getting introduced in IMPS. In UPI, for pay to contacts/mobile number to work, the beneficiary should be a UPI user whereas this IMPS simplified flow will work for all bank accounts," says Sumoth C.
The maximum person-to-person fund transfer limit is capped at Rs 1 lakh under UPI whereas the users can make mobile number-based payments up to Rs 5 lakh with IMPS simplified flow.
"This innovative approach is poised to empower users with more seamless, transparent, and convenient payment solutions in just two steps by entering the beneficiary’s mobile number and bank name. With this move users will experience swift transaction processing, quick, secure, and user-friendly money transfer alternatives," says Rahul Jain – CFO of NTT DATA Payment Services India.
"The proposed fund transfer flow simplifies the information required for processing of fund transfer transactions, enhancing user convenience and reducing the chances of errors and frauds. Since the flow mandates beneficiary verification before initiating the payment, it also adds an extra layer of security. The feature will also aid in streamlining and easing the cross-border inward remittance process, which in some used cases, uses the IMPS rails for domestic instant settlement," says Rajan.
In a nutshell, the new simplified IMPS explained —
1) Pay using a mobile number and select the beneficiary bank name, no need for an account number/IFSC.
2) Real-time beneficiary validation before authorising transaction. Lesser scope of incorrect or wrong account transfer.
3) Transfer up to Rs 5 lakh without adding beneficiary.
[The Economic Times]
