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Difference Between NEFT and ECS


NEFT and ECS are two types of electronic payment and settlement systems being used in many developing countries including India.


“NEFT” stands for “National Electronic funds Transfer.” It is a country-wide payment system enabling one-to-one funds transfers. Under this program, corporate houses, firms, and individuals can transfer funds electronically to any other corporation, firm, or individual having an account with any branch of a bank in the country. However, the referred banks should participate in the program; that is, the bank concerned should be NEFT enabled. The advantage of a core banking system is taken in NEFT. In India, the settlement of funds takes place centrally at Mumbai between the receiving and originating banks while participating banks can be situated anywhere in the country. Transactions do not originate from NEFT to draw funds from another account instead it acts as a credit pusher.

Benefits of NEFT:

It is cost effective.
No need to send a physical check or demand drafts to the beneficiary.
No need to visit the bank for depositing paper instruments.
No possibility of theft or loss of the physical instrument.
Remittance is possible at home using Internet banking.

“ECS” stands for “Electronic Clearing Service.” It is a system of electronic funds transfers from one account to another bank account with the help of services provided by a clearing house. It is normally for bulk transactions from one account to a number of accounts or vice-versa. It is just like making payments of interest, dividends, salaries, and pensions by concerned institutions or for the collection of amounts for purposes of payments to utilities such as telephone, electricity, housing taxes, or for paying loan installments to banks or financial institutions.

After getting registered with an approved clearing house and the consent of the beneficiaries, an ECS user can initiate to make bulk payments to such beneficiaries.

Benefits of ECS:

The end beneficiary need not go to his/her bank and stand in queue for depositing the physical instruments.
No need to anticipate theft or loss of the instruments and fear of fraudulent payment.
No delay in the realization of proceeds.
Customers need not track down his/her payments history as all this is monitored by ECS.


1.NEFT and ECS both are electronic transfer fund modes which operate on a deferred net settlement basis, and they settle all transactions in batches at a particular of time while delaying such transactions until that time.
2.ECS is mainly used for debits and credits for low-value transactions which are frequent and repetitive transactions while NEFT is used for high-value transactions.

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  1. Like to have as many difference between, covering various arenas as it is very much useful as well as entertaining to read

  2. In ECS and NEFT , how to know at what time the recipient’s account is credited .

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