ACH vs. Wire Transfers: What's the Difference?

It's More Than Just Moving Money

Table of Contents
Table of Contents
The differences between ACH and wire transfers.

 The Balance

ACH and wire transfers are types of electronic transfers. They can often be a good option when you want to send or receive money. The funds move safely, and there’s nothing to get lost in the mail. Banks keep transaction records that make it easy to track their progress.

Wire transfers are individual requests, while ACH transfers are handled in batches. Employee payroll checks are often directly deposited using ACH transfers. Wire transfers typically have a fee, while ACH transfers are often free to consumers or they have minimal fees.

What's the Difference Between ACH and Wire Transfers?

 ACH Transfers  Wire Transfers
Typically take one business day to complete Typically completed within one business day
Can be reversed Often used by scammers
Typically free or very low cost Typically cost $10 or more to send

Transfer Speed

Wire transfers move funds from one bank to another within one business day. The money can even be available for spending that same day in some cases.

But sometimes the funds aren’t visible in the recipient’s account, or you may not have access to the funds immediately. The process is mostly automated, but sometimes a bank employee must review wire transfers and get the funds into the destination account.

Consider requesting wire transfers first thing in the morning if time is of the essence so there's plenty of time to complete the process.

International wires can take an additional day or two.

ACH transfers typically take one business day to complete. Banks and clearinghouses process ACH payments in batches. They’re all done together instead of individually. The ACH system is moving toward same-day transfers, however, and some payments may be eligible for same-day treatment. You should see payments take place more quickly as organizations adapt to these rules.

Certainty and Safety

Wire transfers are similar to an electronic cashier’s check when it comes to safety. The bank typically treats the payment as cleared money when it receives the funds. It allows the recipient to spend or withdraw the money as soon as the payment is credited to the final account.

The funds must be available in the sender’s account before the bank sends funds when sending money. The bank will immediately remove the money from the sender’s account while processing the request.

Scam risks are always high when you send money via wire transfer, but your risk is relatively low when you receive funds.

You can be confident that the sender had funds available and that their bank sent the money if you receive a genuine wire transfer. Wire transfers are a relatively safe way to get paid, and, unlike cashier’s checks, they aren’t often faked. Just make sure you receive a real wire transfer rather than another type of electronic payment. Venmo and other services are not bank-to-bank wire transfers.

You must be completely certain that you know who you’re sending the funds to if you send money by wire. A wire transfer generally can't be reversed, and the recipient can withdraw the funds immediately.

ACH transfers are also quite safe, but ACH transfers into your account can be reversed. This might happen if your employer makes a mistake, such as overpaying you by accident, or if fraudulent transfers are made out of your account. There are rules about when and how banks authorize reversals, however, so most transfers are going to stay put unless there was clearly fraud or a mistake.

The processor may be able to reverse deposits if payment processors credit your account with ACH. A customer chargeback (whether legitimate or fraudulent) may result in the processor taking that money back later if your business accepts credit cards or PayPal.

You may have to provide information about your bank account with either type of transfer, including your account number, bank routing number, and your name. These details can be used to steal funds from your account, so you should only provide this information if you trust the recipient.

Cost To Send and Receive

Banks and credit unions typically charge anywhere from $10 to $35 to send a wire transfer within the U.S., but international transfers cost more. Receiving a wire transfer is often free, but some banks and credit unions charge small fees to receive funds by wire.

You'll pay much more due to higher interest rates and cash advance fees if you fund a transfer with your credit card.

ACH transfers are almost always free for consumers, especially if you’re receiving funds in your account. Sending money to friends and family using apps or P2P payment services is usually free or around $1 per payment. These services often use the ACH network to fund payments.

Businesses and other organizations that pay wages or accept bill payments by ACH typically pay for that service so you don't have to. Transaction charges are usually less than $1 per payment.

What Else Do You Need To Know?

You can often arrange both wire transfers and ACH payments online, but it depends on your bank.

You'll provide information about your account and the account you want to send the funds to when you send a wire transfer. The required information includes bank names, account numbers, ABA routing numbers, and the names of each account owner.

Some institutions require additional steps for wire transfers when sending out large transfers. Your bank might require you to verify wire transfer instructions by phone, and you might even have to use electronic or paper forms to complete your request.

You'll usually use either a form from the organization you’re paying or the service you’re using when you send an ACH transfer. You might just need to provide the recipient’s mobile phone number or email address when using P2P services. The recipient provides their bank account information separately.

The Bottom Line

Wire transfers and ACH transfers serve different needs. Wire transfers are best when speed and certainty are critical. Otherwise, why pay the fee and take the extra steps? A typical example is making a down payment for a home purchase. Sellers won’t release the title unless they’re confident you can pay, so guaranteed checks and wire transfers can be useful.

ACH payments are good for small, frequent payments. It’s cost effective to use this automated system as long as everybody involved trusts each other. Common examples of ACH payments include:

  • Direct deposit of employee pay or benefits from Social Security
  • Automatic monthly bill payments to utilities, lenders, and other service providers
  • Moving money between your accounts at different banks
  • Automatic contributions to retirement accounts or education savings accounts

Some merchants and organizations also like ACH transfers for one-off payments. For example, you might have the option to pay by e-check. Doing so authorizes the organization to deduct funds from your account, and it minimizes processing fees. Payments are more expensive when you use a credit card.