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ACH vs Wire Transfers: What’s the difference?
ACH and wire transfers are two of the most popular methods for transferring money in the United States. Although they both facilitate the electronic transfer of funds, there are important differences between the two that can be confusing.
This article explains the differences between an ACH and a wire transfer, and what you should consider when exploring using either method so you can choose the option that best fits your use case.
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 recipient's 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. 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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