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5 Min. Read

ACH vs Wire: Difference Between ACH and Wire Transfer

ACH vs Wire: Difference Between ACH and Wire Transfer

The way we send and handle money has changed over the years. 

Cash was king. But nowadays the crown is being passed. 

We are seeing a rapid increase in electronic payments becoming the norm for financial transactions.

In a recent study, non-cash payments increased by over 10%, reaching $482.6 billion. By the end of 2021, it’s suggested that this will grow by another 13%.

That’s not to say that electronic payments are a recent invention. They have in fact existed for some time. 

But emerging markets like China are now accounting for a significant percentage of the market. This has meant that digital payments are rapidly becoming popular payment methods. 

There are numerous ways to process an electronic payment. These range from physical ways such as credit cards and debit cards, to software such as PayPal. 

Two methods that have stood the test of time are ACH payments and wire transfers. But what is the difference between the two? 

We’ll take a closer look at the key differences. 

Here’s What We’ll Cover:

What Is an ACH Payment?

What Is a Wire Payment?

What Is the Difference Between the Two?

Which Method Should I Use?

Key Takeaways

What Is an ACH Payment?

ACH payments, or Automated Clearing House payments, have been around since the 1970s. 

It is a network used for electronically transferring money between bank accounts. 

ACH is a popular way to transfer money, with transfers worth more than $61.9 trillion being processed in 2020 alone. 

These payments included government, consumer and business-related transactions. They also involved international payments. 

What Is a Wire Payment?

A wire transfer is an electronic transfer of funds via a network. Hundreds of banks and transfer services around the world use wire transfers. 

To process a wire transfer, senders pay for the transaction at their bank. They will provide the recipient's name, bank account number, and the amount transferred.

These payments can also be made in cash at a cash office. 

What Is the Difference Between the Two?

Whilst ACH and wire transfers are both types of electronic transfers, they have a number of differences. 

Let’s take a look at some of those differences:

1. The Way They Are Handled

While wire transfers are treated as individual requests, ACH transfers are handled in a number of batches.

A good example of this is employee payroll checks. These are often directly deposited to employees using ACH transfers. 

2. Processing Times

A benefit of wire transfers is that they are more or less immediate. The funds are usually moved from one bank to another within one business day.

While this is the general rule, there are times where the funds aren’t accessible immediately after you receive the transfer. 

ACH payments on the other hand often take 1–3 days to be processed.

3. The Cost

In the U.S., banks and credit unions typically charge between $10 to $30 for domestic wire transfers. International wire transfers cost even more than this. Because of the wire transfer fees, people tend to only use them either for emergencies, or time-sensitive matters.

Receiving a wire transfer tends to be free, but some banks charge a small fee to receive wired funds.

ACH transfers are almost always free for consumers. If there is a charge, it tends to be a nominal fee - around $1 per transaction. 

4. Security

Both ACH and wire transfers are considered relatively safe. 

However, ACH just edges out wire transfers due to ACH payments having to pass through clearinghouses. This means that they are subject to more rules and scrutiny. 

ACH payments can also be reversed, whereas wire transfers cannot.

This means that scammers typically ask for a wire transfer over an ACH transfer.

Which Method Should I Use?

Both methods are viable options for safely transferring money.

However, there are clear advantages to each transfer method depending on your circumstances. 

If you are a small business owner sending out numerous paychecks to employees, then the more cost-efficient ACH method would be the smart way to go. 

If you urgently need to send a large sum of money to a client, supplier or another business, then a wire transfer would be worth the cost. This is to ensure its swiftness due to same-day transfers.

Key Takeaways

It’s important to state that both of these transfer methods are generally considered safe to use.

As with any transfer of money, it’s vital that you do your due diligence. Make sure that the person you are transferring to can be trusted, no matter how much money you are sending. 

For small business owners that want a quick and safe way to send and accept payments, then FreshBooks may be the solution for you. 

Their accounting software makes it easier for your clients to pay online, which means you get paid twice as fast. 

FreshBooks Payments lets your customers pay directly through invoices. It also automatically records each payment in your account. 

It’s fast, easy, secure and perfectly integrated. 


Find more articles on finance and accounting on our resource hub.


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