Difference Between EFT and NEFT

Edited by Diffzy | Updated on: April 30, 2023


Difference Between EFT and NEFT

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Banking plays an important role in our everyday lives. With the advent of online services, all types of business and financial activities can now be conducted through digital means. Payments to vendors, lenders, and workers are unavoidable and required regularly for business owners.

A bank is a type of financial institution that is permitted to accept deposits and provide loans. Commercial/retail and investment banks are two of the most popular types of banks. A bank may offer a variety of financial services, ranging from safe deposit boxes and currency exchange to retirement and asset management, depending on its nature.

The necessity for repeated visits and long queues to get a turn to complete a transaction is no longer necessary, thanks to online cash transaction capabilities. EFT and NEFT are two of the online money transaction platforms that are revolutionizing financial institutions around the world.

It can save a lot of time to avoid the difficulties of utilizing cash and checks, which is one of the reasons why consumers choose EFT or NEFT over the traditional ways of cash transactions.

Banking has become a necessary element of our daily lives. It may consume a significant amount of time from our everyday lives, since too much time is spent waiting in lines, filling out forms, and so on. These issues are now addressed by a variety of online payment methods, including NEFT.

By leveraging online bill payments, payment operations, and purchases, we are increasingly approaching a paperless banking structured system using EFT technologies. Large sums of money can be exchanged through payment structures and invoices as they are done through digital channels in a paperless system. EFT is crucial in this situation because it is quick, secure, and simple to use. This type of money transfer system is flexible across multiple banking institutions, which is a significant benefit that lends credibility to this technique of money transfer over older methods.


National Electronic Fund Transfer is abbreviated as NEFT. In India, the term 'NEFT' refers to an electronic fund transfer system in which transactions are settled electronically between banks and the service is available throughout the country. Electronic Fund Transfer is abbreviated as 'EFT.' This term can refer to a variety of things. EFT, also known as RBI-EFT in India, is a technology introduced by the Reserve Bank of India that offers the same functionality as NEFT but is limited to a few locations in India. RBI-NEFT, unlike RBI-EFT, is based on a centralized concept. EFT can also be thought of as a catch-all phrase for any mechanism in which monies are moved from one bank account to another without the need for actual paper money.

We frequently need to move money from one account to another. The introduction of new technologies simplified the process considerably. Looking back, one can recall a large line of people waiting in a bank for various reasons. The terms NEFT and EFT allude to significant services supplied by the developing banking sector. It's tough to distinguish between these two concepts because EFT can be applied to a variety of situations. NEFT, on the other hand, is commonly connected with a nationwide service for electronic fund transfers.

If we consider EFT to be an umbrella word for all electronic fund transfer mechanisms, then NEFT will be included in that group. If we look at the differences from the perspective of India, we can see that they are mostly due to two different payment systems used by the Reserve Bank of India. In this post, we'll look at the meaning of RBI payment methods in India from the perspective of the RBI. However, it's worth noting that NEFT can refer to any country's electronic fund transfer system that operates across the country. National Electronic Fund Transfer is abbreviated as ‘NEFT.’ Individuals or institutions can use NEFT to electronically transfer funds from any bank branch to any other bank branch in the country participating in the Scheme.

In November 2005, India became the first country to implement this method. The Reserve Bank of India ordered all Indian banks to shift to NEFT by the middle of December 2005. To access the NEFT funds transfer network, a bank branch must be NEFT-enabled. NEFT can be used by individuals or institutions who have accounts with a bank branch. Individuals who do not have a bank account can deposit cash at NEFT-enabled branches with instructions to use NEFT to transfer monies.

The term "electronic fund transfer," or "EFT," can apply to a variety of things. It is a catch-all word for all electronic services that allow monies to be transferred without actually transferring actual paper money. This comprises a variety of services such as online bill payment, online shopping, mobile banking, and so on. However, NEFT primarily refers to the Reserve Bank of India's national electronic fund transfer service. The EFT facility, which is also provided by the Reserve Bank of India and is known as RBI-EFT, can be directly compared to NEFT.

The key distinction is that RBI-EFT is limited to 15 locations across India, whereas NEFT is centralized. As a result, the NEFT system might be considered an enhancement over the RBI's existing EFT systems. Both of these systems, however, use Net settlement mechanisms.

Difference Between EFT and NEFT in Tabular form

Specifications EFT NEFT
Extension EFT is a good way to transfer money in and out of the country. Funds can only be moved within the country using NEFT.
Upper limit The maximum amount is determined by the issuing bank. There is no top limit, although banks have the authority to set one if required.
Method Direct deposits, bank transfers, ATMs, debit and credit card transactions, mobile payments, electronic checks, computer banking, and other methods of payment are all available. You can send money to someone else and pay your credit card bills.
Major benefit EFT can be used to make direct deposits, such as employee salaries at a bank, and all kinds of bill payments. Transaction mode that is both safe and quick
Synchronization It works 24 hours a day, seven days a week. It works 24 hours a day, seven days a week.

What is EFT? 

Electronic Funds Send (EFT) is a payment method that allows a user of one bank to transfer money from one account to another. It's also known as a direct deposit because it deposits money into the recipient's account without the need for any physical, such as documents or checks, and because it's easily accessible.

ETFs are based on electronic signals generated by the sender when transmitting money to the receiver. The signals to commence and continue the payment are received instantly by the networks, servers, and payment terminals. Many parties can be the recipient and sender, such as employers to their employees, sellers to customers, retailers, and so on. The ease with which ETFs can be purchased while maintaining transaction security is one of the reasons for their popularity.

They're also quite quick, with funds being credited almost immediately or within a few days. For utility payments, ATM and card payments, or internet transactions via ETF, a digital cheque — usually between vendors and merchants during the purchase, direct deposit, and phone payments — is feasible.

ETFs are secure because they are encrypted with 128-bit signals. As a result, they are safe and quick, as well as cost-effective for enterprises. It is simple to set up, typically requiring simply a bank account and sufficient documentation to authorize transfers at the time of setup. There is no need to provide paperwork or be physically present to start the transfer.

A modest price is usually required to process a payment across a window, and a big fee is charged during the transfer.

All you need to make an EFT payment is your bank account information and the bank account information of the recipient.

You can't cancel an ETF payment once you've started it by selecting Continue after inputting your bank account information.

Direct deposit is the most common type of electronic funds transfer, in which an employee permits her employer to pay her salary straight into her bank account. There are, however, a variety of additional electronic funds transfers, including the following:

  • ATMs.
  • PayPal and Venmo are examples of online peer-to-peer payment apps.
  • Pay-by-phone systems are a type of payment system that allows you to make a payment
  • Wire transfers are what they're called.
  • Online or mobile banking are both options.
  • Checks are made electronically.

What is NEFT? 

One of India's most well-known electronic fund transfer systems is National Electronic Fund Transfer. NEFT is a service that allows bank customers to transfer funds quickly and securely from one account to another. It was first introduced in November 2005. It's a nationwide payment system that makes transactions safe and secure across the country. The many components of NEFT are examined in depth in this article.

Funds are transferred to a credit account with the opposite party utilizing the RBI's (Reserve Bank of India)NEFT service. RBI acts as a service provider, transferring credit to the account of the other bank. NEFT uses a deferred net settlement (DNS) system, which means transactions are settled in batches. The settlement of transactions in DNS takes place only at a specific point in time.

The following are the advantages of NEFT for consumers:

NEFT is a safe and effective method of transferring funds over the Internet. It allows you to send any amount of money quickly.

Low Processing Fees– NEFT is a cost-effective and versatile payment alternative. You won't have to pay your bank a large sum of money to use this service. The fees for processing are low, and you can send any quantity of money without difficulty.

NEFT is a highly dependable technique for sending payments and receiving funds online, and it is a vital part of Internet banking. The majority of banks in India are regulated by the Reserve Bank of India (RBI), so Internet banking is also safe.

Rapid Settlement–Unlike traditional banking methods of fund transfer, NEFT transfers are extremely fast, allowing you to experience faster account settlement and overall business functionality.Rapid Settlement–Unlike traditional banking methods of fund transfer, NEFT transfers are extremely fast, allowing you to experience faster account settlement and overall business functionality.

Main Differences Between EFT and NEFT in Points

  1. The key distinction between EFT and NEFT is that EFT can be used for both domestic and international fund transfers, but NEFT can only be used within India.
  2. EFT allows for a wide range of fund transfers, whereas NEFT is mostly used to deposit funds from the sender's account to the recipient's account.
  3. To make NEFT transactions, a bank must be NEFT enabled. However, EFT merely requires an internet connection to complete the transaction.
  4. Direct deposits are the most widely utilized EFT service for paying salaries to a company's or institution's employees.
  5. The majority of EFT transactions are free, although some ATM transactions may require a modest fee to complete. When NEFT transactions are made between branches of different banks, a modest fee may be charged.


Banking and fund transfers are an unavoidable part of our daily lives. To complete these transactions, secure and efficient fund transfer techniques are required. EFT and NEFT are two commonly utilized fund transfer mechanisms. The convenience of smart mobile phones has greatly expanded their possibilities because they allow for speedier and on-the-go transactions.

Computerized banking methods have opened a lot of possibilities, making financial transactions, bill payments, and purchasing more digital, safe, and faster.

The most notable advantage of NEFT is that there is no upper limit on transaction amounts. As a result, this method of payment is ideal for enterprises that need to move big amounts of money regularly, as well as people with comparable needs.

Even while NEFT enables smaller transactions, such transactions are better served by instant payment apps rather than NEFT. This is because NEFT operates in hourly payment batches, which might take a long time to complete depending on how quickly banks process the request.

For many years, electronic transfer funds have been available, and the economy has benefited immensely from this technical advancement. Credit cards, for example, are an electronic payment system that has simplified monetary transactions and even gives a way to fund common purchases using credit.

Bitcoins are becoming more popular as a result of this, but there are still numerous doubts and concerns about a virtual economy. However, there will always be a risk of identity theft, market exuberance, and privacy concerns. As history has shown, new technology can lead to irrational enthusiasm, resulting in inflated securities and, eventually, a financial collapse. New financial technology, on the other hand, is not yet polished and can be highly pricey.



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"Difference Between EFT and NEFT." Diffzy.com, 2024. Thu. 18 Apr. 2024. <https://www.diffzy.com/article/difference-between-eft-and-neft-144>.

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