There are so many ways of making and transferring money these days. How does one decide when to use which app or payment service? Let’s find out

Over the past few years, new digital payment and money transfer options like e-wallets and Unified Payments Interface (UPI) have become popular. At the same time, older options like National Electronics Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) and Immediate Payment Service (IMPS) have become faster and charges on them have come down. In fact, most banks have either reduced the charges on these services significantly, or have waived them. WhatsApp has also come out with a UPI-based payments option, though it has not been officially launched and is in trial phase now. UPI is also available on several other apps like BHIM, Phonepe and Tez. With so many options for transferring money, how do you decide when to use which option? Almost all these modes of payments, and a few more, can be used easily while shopping online. However, traditionally, the large-format brick and mortar stores have relied mostly on credit and debit card swipes on their point of sale (PoS) systems.

Now many of these stores have also started accepting digital payments through scan and pay options such as e-wallets and Aadhaar-pay. The smaller stores too have started adopting these new modes. While shopping online too, digital payments options like UPI can be used on many sites.

While choosing the option to use while shopping, other things being equal, most people would choose the option that gives them the maximum cashback or points.

However, digital payment modes are not used just for shopping. You could also be using them to transfer money to your family and friends. In such cases, the factors that become important are convenience, charges and safety. Convenience includes the speed and reliability of the transaction as well as its availability at the particular time. For instance, UPI transactions are instant and in most apps mentioned here, simple to use and free of charges, as of now, and are therefore becoming popular. The one drawback is, currently not all merchants accept UPI payments.

When it comes to small-ticket transactions, such as among friends and family, UPI is one of the simplest and fastest ways because unlike in NEFT and IMPS, with UPI you do not have to login to your banking account to create a beneficiary. E-wallets are also a good option. But beware, you may have to pay charges if you want to transfer the unused amount in an e-wallet back to you bank account.

Let’s compare costs
At present the transaction limit under UPI is Rs1 lakh per transaction but there are no charges levied on customers for the using it.

Under IMPS the per transaction limit is Rs2 lakh and the charges can vary between Rs5 and Rs25, depending on your bank. Most leading banks don’t charge for IMPS transactions. Both UPI and IMPS transactions can be done 24x7 and in real time.

If these payments to friends and family are of a regular nature, and have to be done often, then NEFT and IMPS are convenient options. You can use them from net-banking or your bank’s mobile app.

However, for one-time payments or money transfer you would find UPI a better option, as it can be accessed through a variety of platforms.

RTGS is better for transactions that are high-value and need to be processed in real time. The minimum amount of transaction here is Rs2 lakh and these transactions can be done only during a bank’s business hours. Charges for it are capped at Rs55, plus GST.

There is no limit on how much can be transferred using NEFT. However, the transactions are cleared in batches every 30 minutes, and can only be done during a bank’s working hours. There is a cap on its charges, which is up to Rs25, plus GST.