ACH Transfer Vs Wire Transfer – Which One Is Better?

Not many people know the difference between ACH transfer and wire transfer. Actually, many of them are not even aware of how both work. This blog takes you through their working, as well as their differences.

ACH Transfer Vs Wire Transfer

Nowadays there are a lot of methods by which the transfer of money and payments can be done. Both for local and international payments there are various methods available. 

It’s better to get familiar with the risk factors, benefits, etc., and have a complete understanding of the advantages and disadvantages of it before using any of it.

Here, the focus is mainly on the two methods of transfer i.e., ACH Transfer and the Wire Transfer. How both of them are similar and different from each other and a deeper understanding of both is made so that you can know them both before proceeding with any of them. Let’s understand ACH Transfer Vs Wire Transfer.

ACH Transfer and Wire Transfer are both ways of transferring funds from one bank to another.

What is ACH Transfer?

The ACH Transfer stands for Automated Clearing House. An ACH Transfer is a bank transfer or a direct deposit where the funds are sent from the payor’s bank to the receiving bank using the Automated Clearing House (ACH) Network.

If you want to do an ACH transfer, you need the bank account number and the payee’s routing number. To have a deposit to be processed a request is made from the payor’s bank to the recipient’s bank. After processing, the funds transfer by the ACH Network to the recipient’s bank from the payor’s bank.

The Automated Clearing House Network is a network of banks, credit unions, and other financial institutions that are concerned with the batching payments between the two banks. The process is carried out in batches and the payment is received by the banks in batches as well. The transfer of the funds to the appropriate bank accounts is made by the banks thereafter.

The transfer can be made individually or in batches. The whole batching and transfer process is automated and no manual work is needed. If the customer doesn’t have enough balance in their account to satisfy the payment, then the ACH payment can withdraw their account.

The ACH payment method is used for salary deposits, governmental benefit payments, tax refund payments, vendor payments, etc., and this payment method is ideal for recurring payments.

This network is only available in the United States and not available to payees outside the country. For worldwide transfer, there’s an international version of US-ACH which is called the Global ACH and can be used for transferring payment all around the world.

The transfer is made in batches or groups. The clearing of the bank account doesn’t occur unless the clearinghouse processes the batch. Thus, the completion might take anywhere from a few hours to a few days.

An ACH transfer is sometimes also referred to as an EFT or Electronic Fund Transfer. The Electronic Fund Transfer involves many other financial transactions also. ACH Transfer is used increasingly nowadays as it is replacing the paper cheques. If you have been wondering why ACH transfers, the above information should help you understand it. 

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What is Wire Transfer?

Wondering why wire transfer? The wire transfer refers to the electronic interbank transfer method. The requirements are the bank account number and the ABA bank routing number. This kind of transfer is fast and might only take less than twenty-four hours to complete. This transfer is ideal for transactions that are made from different countries and keep changing. 

The larger the amount the more might be the transaction fees and the retraction of a sent amount is difficult due to the high speed of processing.

Being an efficient mode of transferring money, wire transfer enables fund transfer from individuals or entities to other individuals or entities. Wire transfer allows fund transfer between individuals and/or entities in different geographical locations worldwide. 

While implementing a wire transfer, there is no physical money that is being transferred. In fact, the information related to the amount, the sender and receiver is passed through the transfer and the same reflects accordingly on the receiving side. 

Going into more detail, the transfer sender initially pays for the transfer transaction to the bank. The bank that is sending the transfer provides all the necessary information including the account details to the receiving bank. This receiving bank deposits the amount from its own funds in reserve to the correct account as defined by the initial information sent. Once the money has been deposited, the settlement of the money between the two banks is settled at the back-end. 

Some non-wire bank transfers do not require the account numbers in the bank. For example, the Western Union that operates in multiple countries worldwide, and this service provides cash directly to the recipient. 

ACH Transfer Vs Wire Transfer – Comparision

1. Speed

The ACH Transfer can take about 2-3 days sometimes to complete as they are processed by the bank in batches one by one. It may also delay more on some days than the others depending on various factors.

Wire Transfer on the other hand completes the transaction almost immediately as the funds are not held anywhere and the recipient can access the payment immediately. International wire transfer takes more time than domestic wire transfer. The bank transfers the amount as soon as the request is made or in some cases the next day, thus the payment is made without any delays.

2. Cost of Transfer

ACH Transfer is relatively inexpensive and the cost of transfer is only for the sender and not for the recipient. The fees might be less than a dollar or so.

Wire transfer can be more expensive than ACH Transfer and both the payor and the recipient might have to pay. The fees can be anything from $10-$50 depending on the amount and the financial institution. International transfers can cost more. The bank has set its wire transfer fees and all other costs, these include the service fees, investigation costs, and any wire resubmission fees.

3. Payment Security

ACH Transfer can be considered as a better and safer payment option as funds can be retracted in case of payment error or fraud. As the transfer between the banks themselves, it is much safer for payments. An automated payables and global mass payments software apps are present that reduce the chances of a fraudulent transfer to the minimum.

On the other hand, the wire transfer is available immediately to the recipient and this can be a little unsafe because it’s planned to be retracted. Although the payment method is secured, still these are mostly used in scams. Phishing may occur by making a site look authentic, and scammers use this method for payments. Or in some cases, an email might also be sent for the same purpose.

4. Global Transfer

Domestic ACH can only be used in the United States. For global payments, Global ACH Transfer might be used.

Wire Transfer has no such border limitations. It can be used to transfer funds all across the globe.

5. Payment Type

ACH Transfer can be used for bill payments and recurring monthly payments as this is an easier option for such transfers. Some banks do allow ACH transfers to be used for bill payments by the online method.

Wire Transfer can be used for bulk payments usually across the border. The personal or professional transfers involve the bulk transfer of funds like bulky business payments, real estate funds, etc. This is because the transfer fees can be considered negligible in comparison to the funds to be transferred and it also provides quick transfer of funds.

ACH Transfer Vs Wire Transfer – Comparison Table

Sr. No.ACH TransferWire Transfer
1.Slow, may take about 2-3 days to process completelyFast, make only about 24 hours for the processing
2.Inexpensive, may cause around one dollar for the sender.Expensive, may cost around $10-$50 fees for both the sender and the recipient.
3.Relatively safer as payment can be retracted.Relatively unsafe as payment cannot be retracted.
4.Only Global ACH can be used for the transfer of payment worldwide.Can be used for payments all over the world.
5.A good option for recurring paymentsA good option for bulk cross-border payments
6.Less prone to scams and frauds.More prone to scams.

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When to Use ACH Transfer?

ACH Transfer is good for business-to-business payments and monthly bill payments. As the fees involved are small. This can be used when a quick transfer is not a necessity and for domestic transfers. Also, in the case of personal bill payments, ACH Transfer is a better option. Thus, for amounts that have to be paid more often and/or more frequently, then the ACH becomes the best option as it also provides secured transfer cutting out possibilities of scam.

When to Use Wire Transfer?

Use wire transfer for bulk payments and such fund transfer which is cross-border as in such a case the high fees would be insignificant in comparison to the bulk payments. Also, in such cases where quick payment is required, wire transfer is the best option.

Final Thoughts: Key Takeaway Points

Both ACH Transfer and Wire Transfer are good options of payment based on the various factors that are discussed. The ACH Transfer method is processed automatically through the clearinghouse while the wire transfer is initiated and processed by a bank itself. The ACH transfer method can be preferred in some situations and might not be suitable in others, the same is the case with the wire transfer. ACH payment method can be preferred if you don’t have an urgent transfer to make and if you seek a domestic transfer. A wire transfer can be your preferred method if your requirements are cross-border and when the payment should be quick.

Frequently Asked Questions

Which one is cheaper – ACH transfer vs Wire transfer?

ACH transfer costs just a few bucks compared to wire transfer that costs around $20 to $30.


How long does ACH transfer take?

They can take many business days.


How long does Wire transfer take?

They can take a few minutes or a few hours at most. 


What are types of ACH transfers?

There are ACH debit transactions and ACH credit transactions. 


When to choose wire transfers?

Depending on the service you use, wire transfers are good for large-sum transfers or transfers that need to be executed quickly.