Internet Banking vs NEFT: Difference and Comparison

Internet banking and NEFT are the terms related to the transaction of money. These are the most essential services that are provided to the people by the advancing banking sector.

Key Takeaways

1. Banks offer Internet banking, which allows customers to conduct various financial transactions online, such as account management, bill payments, and fund transfers.
2. National Electronic Funds Transfer (NEFT) is a specific electronic fund transfer system in India that enables interbank transfers with predetermined settlement cycles.
3. Internet banking is a broader term that encompasses multiple online banking services, whereas NEFT is a specific type of fund transfer service within the Indian banking system.

Internet Banking vs NEFT

The difference between Internet banking and NEFT is that Internet banking is very effective for the customers as they do not need to go to the bank for numerous banking activities, and only after a few simple clicks is the job done while just sitting in the comfort of home. In contrast, NEFT provides the faculty to such people who do not have a bank account can also deposit their cash at the NEFT-enabled departments with instructions to transport funds using NEFT.

Internet Banking is the faculty to operate financial transactions through a safe and secure website, whereas NEFT is an electronic fund transfer system in which dealings are resolved in assortments during specific timings.

Internet Banking allows the user to perform monetary transactions via the internet. It is moreover understood as online banking or web banking.

Through this, one can do the primary transfer of money i.e. the individual can transfer funds between accounts and compensate bills effortlessly at any time per their comfort. 

NEFT, or National Electronic Funds Transfer, is upheld by the Reserve Bank of India and was launched in November 2005. It is a network through which funds are transferred electronically.

The Institute for Development and Research in Banking Technology organised and upheld the format. 

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Comparison Table

Parameters of Comparison	Internet banking	NEFT
Purpose it servers	It allows consumers to access their bank accounts and make any transactions without physically attending any of the branches of financial organizations.	It enables bank customers to transport funds between any two NEFT-enabled bank accounts for a one-to-one purpose and is done via electronic messages
Maximum transfer limit	2 lakhs	No Limit. Every transaction is capped at Rs.50,000
Service timings	Accessible 24×7	Accessible on all working days except the 2nd and 4th Saturday of the month, inaccessible on Sundays and Bank Holidays.
Transaction charges	In internet banking, a bank charges a sum of Rs 20 for each financial and a sum of Rs 8.5 for each non-financial transaction.	No charges for inward transactions
Mode of payment	Online	Online and offline

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What is Internet Banking?

Internet banking is a faculty given by banks that allow customers to use banking assistance over the internet and is also known as online banking or e-banking. Customers can avail of every small service by just sitting at their homes.

Internet Banking is an accessible medium to use, and it saves a lot of time and effort and is pretty safe, but there are some precautions to be taken while handling accounts online.

Features of Online Banking:

1. You can check the statements of your account online.
2. You can open a hard and fast-time deposit account online.
3. You pay bills like water and electricity bills.
4. You can make merchant payments online.
5. Transfer funds easily.
6. The chequebook can be ordered.
7. It can buy general security.
8. You can recharge mobile/DTH.

Advantages of Internet banking:

1. Internet banking is easy to Operate: There is no need to visit the branch of your bank, and many people find it convenient to operate their transactional activities with a few clicks.
2. You can track your transactional Activity: There are possibilities of losing the acknowledgement receipt you receive when transacting at the bank. However, it will be recorded when you perform the same transaction via the bank’s internet banking portal. If required, then this can be shown as proof of the transaction.
3. Time Efficient: It takes minutes via internet banking to complete the transaction. You can transfer your funds to any account within the country or open a fixed deposit account within a few minutes on internet banking.

Disadvantages of Internet banking:

1. Transaction Security: Online transactions are still susceptible to hackers, no matter how many precautions banks take to provide a secure network. Irrespective of the highly developed encryption methods used to keep user data safe, there have been cases where data transactions are compromised. This may cause significant risks, such as using the data unlawfully by hackers for their benefit.
2. Internet Requirement is a must: Internet access is the only condition for internet banking. You cannot use online services until you have an uninterrupted internet connection. Similarly, if, by chance, due to technical issues, the bank servers are down, then also you cannot access net banking services.
3. Securing Password: The password must be entered to access the services required in every internet banking account. A key role is played the password in maintaining reliability. Others may utilize the information to formulate some scam if, by any chance, the password is exposed. The password you choose must obey the rules affirmed by the banks. To secure your account from robbery, one must change the password regularly, which can also be a fuss to remember the owner’s password.

 

What is NEFT?

National Electronic Fund Transfer enables customers to transfer funds quickly and securely from one account to another. It is one of the most prominent electronic fund transfer systems in India, provided to people by banks.

National Electronic Fund Transfer is operated based on (DNS), i.e. deferred net settlement, and this settles the transactions in batches. The settlement occurs only at a particular point in time.

Features of NEFT are:

1. Saves time and effort
2. Payments occur electronically
3. Payments occur over a secure mode
4. There is no transactional fee

Advantages of NEFT

• It is safe and effective – NEFT helps you to transfer any amount of money speedily as it is a faultless transfer of funds on the Internet.
• Requires low Processing Charges– NEFT is very reasonable due to its flexible payment option. You can utilize this faculty in which you don’t have to pay a giant sum of money to the bank, and you can transfer any amount without any complexity.
• Highly Dependable– NEFT is an essential feature of Internet banking and is a highly reliable way of receiving funds and making payments online. In India, most banks are synchronized under the standards set by RBI, and this facility is safer to use.
• Rapid Settlement– NEFT transfers funds quickly, with the usual banking methods of fund transfer, and there is a benefit of rapid agreement of accounts.

Disadvantages of NEFT and Internet Banking

• Highly Technical – One of the significant drawbacks of NEFT transfer in India is that it is a highly technical way to transfer funds which is not easy for everyone to operate. A person with little information on computers and the Internet might not be able to operate an Internet banking account effortlessly.
• There is a Risk involved with Online Payments – Most of the banks in India take proper steps to secure an NEFT transaction. Still, to a certain extent, it can be possible that the information you are providing online might get passed on to a hacker if you’re not using a secured browser, and this is one of the most crucial reasons that many people across the country don’t believe in this facility.

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Main Differences Between Internet Banking and NEFT

1. Net Banking is the facility to conduct financial transactions through a secure website, whereas NEFT’ is an electronic fund transfer system in which transactions are settled in batches during specific times.
2. Money Transfer System in internet banking is generally instant, whereas NEFT takes up to 48 hours.
3. Internet banking coverage is national and international, whereas, in NEFT, transactions are within the Nation.
4. Usage in internet banking is in all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests. In contrast, NEFT electronically transfers funds from any bank branch to any individual, firm or corporation with an account with any other bank branch in the country.
5. There is no holiday restriction in internet banking, whereas, in NEFT, holiday restrictions exist.

References

1. https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=2759208#page=34