Difference between Transfer Rules and Update Rules.

Transfer Rules:
When we maintains the transfer structure and the communication structure, we use the transfer rules to determine how we want the transfer structure fields to be assigned to the communication structure InfoObjects. We can arrange for a 1:1 assignment. We can also fill InfoObjects using routines, formulas, or constants.
Update rules:
Update rules specify how the data (key figures, time characteristics, characteristics) is updated to data targets from the communication structure of an InfoSource. You are therefore connecting an InfoSource with a data target.

1. Transfer rules are linked to InfoSource, update rules are linked to InfoProvider (InfoCube, ODS).
i. Transfer rules are source system dependant whereas update rules are Data target dependant.
ii.The no. of transfer rules would be equal to the no. of source system for a data target.
iii.Transfer rules is mainly for data cleansing and data formatting whereas in the update rules you would write the business rules for your data target.
iv. Currency translations are possible in update rules.

2.  Using transfer rules you can assign DataSource fields to corresponding InfoObjects of the InfoSource. Transfer rules give you possibility to cleanse data before it is loaded into BW.
Update rules describe how the data is updated into the InfoProvider from the communication structure of an InfoSource.
If you have several InfoCubes or ODS objects connected to one InfoSource you can for example adjust data according to them using update rules.
Only in Update Rules:
a. You can use return tables in update rules which would split the incoming data package record into multiple ones. This is not possible in transfer rules.
b. Currency conversion is not possible in transfer rules.
c. If you have a key figure that is a calculated one using the base key figures you would do the calculation only in the update rules.