ACH vs. wire transfer: 4 must-know differences and benefits

ACH vs. wire transfer: 4 must-know differences and benefits

What's the difference between ACH and wire transfers?

The main difference between ACH and wire transfers is that ACH transfers are done through the Clearing House Network, while wire transfers are completed from bank to bank.

Cash and checks used to be the norm for payroll, bill payments, and more. But in today’s digital age, the electronic transfer of funds is now a necessity when accepting payments through your online checking account.

When it comes to digital payments, there are two main players: ACH transfers and wire transfers. While both are ways to send money electronically, they’re very different processes.

In this post, we’ll review ACH vs. wire transfers and their key differences and benefits so you can find the electronic transfer solution that works best for your business.

What is an ACH transfer?

An ACH transfer is a type of electronic payment between bank accounts through the Automated Clearing House (ACH) network. 

The ACH Network is a network of banks and other financial institutions that use batch processing to transfer funds from bank to bank. Essentially, these financial institutions group ACH transactions together and transfer them three times each day. This process is overseen by an organization called Nacha, which connects all US bank accounts and implements rules and standards for financial transactions.

A flowchart explains how ACH transfers work, which goes from the sender to the ACH clearing house and then the receiver.

ACH transfers don’t require the bank as a middleman, instead, it used the ACH Network to make transfers. This allows people to send and request money transfers independently. These types of transfers are usually used for payroll, bill payments, and recurring transactions.  

ACH payments fall into two different categories: 

  • ACH direct deposit: This is when a government entity or a business makes payments to an individual. 
  • ACH direct payment: This is when an individual or business sends money through the ACH Network. It uses a debit and credit system to send money from one bank account to another.

If you’ve ever used a payment app like PayPal or Venmo, you’ve made an ACH direct payment.

What is a wire transfer?

A wire transfer is an electronic payment that sends money from one bank account to a different bank. This type of transfer is also known as an interbank payment. 

The sender issues a payment to their bank, which issues it to the recipient’s bank, and finally to the recipient. This way, the bank acts as the middleman for the payment. Some people think of wire transfers as eChecks because they are a lot like an electronic version of a cashier’s check—as soon as you initiate the transfer, the funds are taken out of your account.

A flowchart explains how wire transfers work, which goes from the sender's bank to the receiver's bank.

Unlike transferring money from your checking account to your savings account, a wire transfer does not require the bank accounts to be linked together. Instead, a wire transfer uses the recipient’s bank account number and American Bankers Association(ABA) routing number, a unique nine-digit number that identifies each banking institution.

While wire transfers can be used for any amount of money, they are most commonly used to transfer larger transactions, like real estate or during mergers and acquisitions, since they have a faster transfer speed and usually a high transfer limit.

ACH vs. wire transfer: 4 key differences

Though people may use the two terms interchangeably, ACH transactions and wire transactions are very different transfer services. Let’s look at the key differences between the two.

A table explains the difference between ACH vs. wire transfer, include how they differ in terms of speed, costs, payment options, availability, and safety.

1. Speed

Winner: Wire transfer

When it comes to money transfer, speed is always key. Recipients usually don’t want to wait days for payment processing before their funds become available to them.

Wire transfer is king when it comes to transfer speed. When sending money domestically, wire transfer payments are almost always available by the next business day. In many cases, wire transfers can even be available on the same day, as long as you meet the bank’s deadline for same-day transfers. However, human error, holidays, and location can extend this period up to 10 days. 

ACH payments, on the other hand, can take three to five days for the funds to become available, though sometimes they can be available much sooner. You might also have the option to pay extra to get funds transferred faster. 

2. Costs

Winner: ACH transfer

If you’re looking for a cost-effective way to send money, ACH is the way to go. ACH transactions are usually free for consumers depending on the bank and business bank account you use, but the average cost ranges from 26 to 50 cents per transaction. Though when using payment services like PayPal or Venmo, you might have to pay a higher fee. 

Business owners and institutions that use ACH payments for direct deposit have to pay a fee, but it’s never charged to individuals. Therefore, ACH transfers can be a great choice for payroll.

Wire transfers, on the other hand, have costs associated with them. Most domestic wire transfers cost between $20 and $35 to send, and the cost is higher for international wire transfers. Receiving banks may even charge the recipients a small fee for the transfer into their accounts.

3. Availability

Winner: Wire transfer

While both services send money within the United States, only wire transfers offer international transfers. ACH only offers domestic money transfers, although it does have a partner system called Global ACH that can transfer internationally through other bank-to-bank networks.

ACH transfers are bidirectional and allow the receiver to initiate the request to transfer funds. On the other hand, only the sender can start the transfer with wire payments. 

4. Safety

Winner: ACH transfer

ACH payments are considered the more secure payment option for senders since Nacha oversees the ACH Network to ensure safety. If there’s an error or mistake with the money transfer, there are ways to reverse the payment.

While there have been scams associated with ACH payments, the transfers typically require you to enter a significant amount of bank account information, which makes them a more secure money transfer option.

Wire transfer is a less secure system for money senders. Wire transfers are fairly instant and once processed, cannot be reversed. If your money is transferred in error or as a result of fraud, it’s almost impossible to get back.

Recipients of wire transfers, however, don’t have too much to worry about, as the funds are accessible immediately.

Which one is better for your business?

While there are certainly pros and cons of each method of fund transfer, there are only a few scenarios in which a wire transfer will be the better payment option for your needs. 

The majority of businesses use ACH payments, as this type of money transfer is considerably less expensive while offering more security. Unless you need your money to arrive that same day, ACH payments are a great option.

In the event that you do need to send money for same-day delivery or you need to send money internationally, wire transfers may be your best bet. However, always be sure to verify the legitimacy of your recipient.

You can also use a combination of both methods in your business. For example, you might use ACH transfers for recurring payments, payroll, and business-to-business transfers and use wire transfers for large sums of money, one-off payments, and down payments.

Accept payments anytime, anywhere

No matter how your customers choose to settle up, track payments in one place and make managing your business finances easier than ever.

Save time and money with streamlined payments in QuickBooks

Choosing between ACH vs. wire transfers for your business will depend on what you want to accomplish. If you’re looking for flexible payment options, with QuickBooks Payments, you can accept a variety of payment types, including debit cards, credit cards, ACH payments, and eChecks

QuickBooks can help you get your money when you need it, with options to receive payment instantly or the next day. Online invoicing, mobile payment processing, and recurring payments make it easy for you to get paid and focus on other aspects of your business.

ACH vs. wire transfer FAQ


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