February 9, 2025 · 12 mins read
Santosh Kumar
The present world is modern in most of the ways. It would be inappropriate if we don't call it modern in daily lifestyle activities, including money. The arrival of technology not only invented and discovered technical and electrical tools but also gave birth to seamless electronic transactions for money. From using cash and cheques for financial transactions, we have developed a lot by using online transactions, which saves our time in multiple ways. Today's most widely used cashless online transactions are UPI and NEFT in India. Let's know more about UPI and NEFT transactions, their differences, and their benefits for better understanding.
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UPI stands for Unified Payments Interface, and it is a real-time transactional process performed with the help of a mobile phone. Transferring funds from one account to another with mobile phones is easy. Launched in 2016, it has become the most common payment option among people. One of the major advantages of UPI is that it allows users to link multiple bank accounts to a single mobile application and provides a secure and seamless transaction experience. It works on simplifying payments digitally, thereby creating user-friendly features.
With UPI, one can make payments to individuals and merchants for goods and services. To use UPI, one needs to have a bank account with a mobile number linked with that, a smartphone with internet facilities and a debit card to reset the MPIN (Mobile Personal Identification Number). After that, you need to create a UPI ID and a UPI PIN. The UPI ID might look similar to an email address. It may have alphabets or numbers. For example, a UPI ID can be like abcdefg@upi or 1234567@upi. The UPI PIN is a password that must be set for safe and secure transactions. Every time you make an online transaction with UPI, it will ask you to enter your PIN before processing the money. It might be four or six-digit pins that you need to set for your account.
1: Let's see how UPI works for transactions.
2: First, you have to initiate the transaction by going into the application
3: Next, you have to select the UPI ID or scan the QR code to which you are going to pay the money. The QR code will be associated with a UPI ID
4: Once done with selecting the UPI ID or scanning the QR code, you are now good to go with entering the amount of how much you need to pay
5: After that, it will ask you to enter the UPI PIN to complete the transaction
6: You'll receive a confirmation message once the transaction is successfully done.
It is simple and user-friendly, with easy steps for transferring the amount to an individual person or to a merchant.
Read More:: How To Change Upi Id In Paytm
NEFT stands for National Electronic Funds Transfer, and it transfers funds from one account to another, which has an NEFT-enabled feature. It is a nationwide transaction, and it can be done online and offline by visiting the banks. It was introduced in 2005 in India and has become a significant element of people's lives. It is not an instant transaction as UPI, however, it will take some time from a minimum of half an hour for the transaction to be successful. Moreover, the transaction timings depend on the bank, the day of the week and the batch timing that NEFT follows.
Let's see how NEFT works for transactions.
1: The initial step is to set up the beneficiary details to whom you're going to transfer the funds. You need their name, contact details, bank name, branch, account number, account type, and IFSC code. To fill out these details, you have to go to the 'NEFT' section in the 'Fund Transfer' of your bank application.
2: After entering the above details, you can fill in the amount that needs to be remitted
3: The NEFT service centre will initiate the transaction, and the amount will be transferred within a few hours.
4: If the amount is not being transferred to the recipient account, it will be credited back to the sender itself
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There are some differences between UPI and NEFT transactions, though they have many things in common. Let's examine all the differences between them.
Medium of transaction/platform: This defines the nature of the transaction, be it online or physical. UPI is entirely an online-based transaction process, where both the sender and the receiver are supposed to have an account with a UPI ID. On the other hand, NEFT is a multitasker because it is available both online, like mobile banking and internet banking, and physically at the banks' branches.
Payment processing mechanism: The payment processing time varies for UPI and NEFT transactions. For UPI, it is a real-time transfer of money. Whereas, for NEFT, the money is processed on a batch basis, which takes a minimum of half an hour and a maximum of 12 hours to be received by the recipient. Here, the difference between UPI and NEFT transactions is very much evident since one is an instant transfer mechanism and the other is a scheduled transfer of funds.
Limits of transaction: NEFT transactions are not limited. However, with UPI, you can pay a maximum of 1 lakh rupees per day, and this limit also depends on the bank.
Cost of transaction: Usually, UPI transactions don't charge you for any payments made with them. But NEFT might not charge for transactions made online. If you make a NEFT transfer by visiting the banks, you'll be charged according to the banks.
Requirements to initiate transaction: For a UPI transaction, you need to have the UPI ID of whom you want to send the money. On the other side, for the NEFT transaction, you're in need to enter the beneficiary details manually before initiating a transaction. UPI looks simpler and quicker since it doesn't need to enter the beneficiary details. You just have to either enter the UPI ID or scan the QR code and begin your process with the recipient.
Security and verification: Since both are related to money transfers, they need to be highly safe and secure. To protect the transaction from any form of scam or phishing, the transaction is protected with verification before processing the payment. For UPI, you need to enter the PIN, which acts like a password, before confirming the payment. As for NEFT, it has a two-step verification process before submitting the money for remitting. Either way, both are protected.
Two-way transaction: UPI is used for sending and receiving money. That is, it can transfer and collect money in transactions. However, NEFT can only transfer money, and collection of money is not possible in its nature.
Read More:: How to Reset UPI PIN on PhonePe
We have seen the differences between UPI and NEFT transactions. Now, it is time to know their benefits. There are several benefits of UPI and NEFT transactions. But the most similar benefit of both is their 24/7 availability. This allows people to make transactions at any time, anywhere. It is not bound by bank hours, so it is easier for you to use it whenever you want to make any fund transfers.
Benefits of UPI: The major benefit of UPI is that it is one of the hassle-free, fast, and cheapest modes of money transfer. It helps you maintain and link all your accounts with one single UPI account, thereby making it easy to manage them. You will have the option to choose from which bank account you will make the payment. So this avoids the chance of shifting from one account to another. We can easily select which account while processing the transfer.
Benefits of NEFT: If you need to transfer a large amount of money, NEFT will be your one-step solution. It is always recommended to use NEFT since it is easier and safer. The process is highly secured with verification, which protects the money from fraudulent activities.
The transaction status is nothing, but it shows if the money is in processing, pending, or there was an error in processing the payment. Here are the steps to see the transaction status for a payment made with UPI.
1: Open the UPI app, which was used for the payment
2: Go to the transaction history section or recent payments
3: There, you need to locate the transaction. You can identify it with any one of the following: date, amount or the recipient
4: After finding which one you need to check the transaction status, click on that, and it will show the transaction UPI ID along with the status of the payment
Read More:: How to Reset UPI PIN
Let's now see how to check the transaction status of NEFT transactions. For that, we need to have the reference number that's generated for the transaction. It is called a Unique Transaction Reference (UTR) number. It is a 16-digit alphanumeric number. The first 4 digits represent the IFSC code of the sender's bank. The 5th digit indicates the NEFT system, 6th and 7th represent the year of the transaction. Then, the next three digits will be the day of the year, and the remaining digit will be a unique number created for the transaction.
1: You can check the bank statement or passbook with the reference number for the transaction status
2: If it is an online banking transaction, you can go to the banking portal and then click the transaction history section. There, you can locate the transaction with the reference number
3: In the case of mobile transactions, you can go to the application, navigate to transaction history, enter the reference number or locate it, then click the submit option if available or view the status option to get to know the status of the transaction
Read More:: How to Change UPI PIN in Google Pay
We have seen what UPI and NEFT transactions are, their benefits, how they work and their differences. Both of them have their own pros and cons. We can choose the most suitable transaction options depending on the needs and requirements. Each has its own values and procedures, too. Moreover, both methods have earned the trust of a lot of people and are user-friendly transactions. After knowing their details, it is always your preference to choose which payment method suits you better. Such informed decisions will lead to correct choices. Hence, the choice is all yours in selecting them for your payments! Have safe and secure transactions with them!
Which fund transfer is better, is it UPI or NEFT?
According to the difference between UPI and NEFT transactions, both are unique in their nature and specifications. If you want to make a smaller transaction value, you can choose UPI, or if you are transferring a huge amount of money, then you can choose NEFT. Depending upon the need, you can choose the method of transaction that suits it. Both are very effective in their own way.
Which one is fast in the transaction, UPI or NEFT?
Obviously, the answer will be UPI since it is a real-time, instant payment option that we all use. Regardless of that, if you're making a large amount, then you have to rely on NEFT, which also doesn't take much time. It will be transacted on a half-hour basis. So, even though UPI is an immediate transaction, we cannot transfer huge amounts.
Can I transfer money in offline mode with UPI or NEFT?
The offline transaction mode is available only for NEFT, where you can visit the bank and transfer money via NEFT. This does not apply to UPI since it is completely an online-based transaction process.
Who owns UPI and NEFT?
UPI and NEFT are under the control of different people, though they are in the same category of fund transfer. The UPI was developed and maintained by the National Payments Corporation of India (NPCI). Similarly, the Reserve Bank of India (RBI) maintains and manages NEFT.
How to find out who has sent you the money in UPI and NEFT?
The UPI and NEFT transactions not only allow you to send the money, but you can also check from whom you have received the money. The process is the same as the process of checking the transaction status. You have to navigate to the transaction history, and there you can see the details of transactions, filtered by the dates they're done. If you click on any of those transactions, you can see the sender's name and payment details. It could include the sender's name and their account number, and in the case of NEFT transactions, the reference number will sometimes be displayed.
Is an ATM card required for UPI and NEFT transactions?
The ATM card is not necessarily needed for UPI and NEFT transactions. Both require only a bank account and a mobile phone with internet facilities.
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