ACH transfers vs Wire transfers: What’s the difference?
Moving money around is a fixture of life, and there are so many options with which you can do so, but the most important thing to always consider is which option works best for you.
ACH transfers and wire transfers are the two most popular methods of transferring money within the United States, and there is no small amount of confusion on what the difference is between these two methods of transfer, primarily because they both facilitate the electronic transfer of funds, and seem to work the same way.
In this article, we break down the difference between these two methods and what you should consider when you want to do an ACH transfer or Wire transfer, so you can figure out which is the best fit for your needs.
How ACH & Wire transfers work.
ACH transfers are electronic money transfers between banks over the Automated Clearing House network. When you initiate an ACH transfer, your bank adds your transfer information to a pile of ACH transfers initiated by other customers and sends them out in batches to the ACH network for processing.
The ACH network then clears and sends payment to the recipients' bank account.
On the other hand, wire transfers are electronic money transfers that usually happen over the SWIFT (Society for Worldwide Interbank Financial Telecommunication) and Fedwire networks.
If you want a more detailed breakdown of how wire transfers work, read our guide to wire transfers here.
The significant difference between ACH transfers and Wire transfers is the respective networks over which they are processed. This, in turn, affects the speed and cost of each transfer method.
ACH transfers vs Wire transfers
Wire transfers are a lot faster than ACH transfers are. They are typically processed and delivered in 1 business day, while ACH transfers can take 2 - 3 business days. This is because banks usually process ACH transfers in batches.
ACH transfers tend to be low cost or free, especially for the recipient. If there are charges for the sender, it's always about $1 per payment. On the other hand, wire transfers are more expensive, ranging from $20 - $30 on domestic wire transfers within the US and $30 - $50 on international transfers.
ACH transfers are the safer option for people sending money because you can request a reversal if there is an error or fraudulent transaction. However, with wire transfers, reversals are not possible.
Lastly, while ACH transfers are mostly used for payments within the United states. International ACH transfers are possible, but only a few banks offer this service.
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