ACH vs. Wire Transfer

How they Compare, When to Use a Wire Transfer

Electronic Money
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There are several ways to send money electronically. Two of the oldest and most popular choices are ACH transfers and wire transfers – they both move funds from bank to bank safely, but they work differently. If you’re deciding how best to send (or receive) funds using your bank account, you’ll need to compare and contrast ACH vs. wire transfers.

Speed of Transfers

Wire transfers move funds from one bank to another in one business day, and the funds can even be made available within that day.

That said, sometimes when you receive a wire transfer, you won’t see the funds immediately. A bank employee generally needs to review the transfer and get the funds into your account (the process is not 100% automated). If time is of the essence, request your wire transfer first thing in the morning. International wires can take an extra day or two.

ACH transfers often take two to three business days to complete. Banks process ACH payments in batches – they’re all done together instead of being handled individually, first-come-first-served. At some point, ACH transfers might become same-day transfers, but it hasn’t happened yet.

Certainty and Safety

Wire transfers are similar to an electronic cashier’s check: the bank treats the payment as cleared money and allows you to spend or withdraw once the payment is received. Likewise, the funds must be available in the sender’s account before the payment is issued, and will be immediately removed from the sender’s account as the request is processed.

If you receive a genuine wire transfer, you can be confident that the funds were sent – so wire transfers are relatively safe ways to get paid (unlike fake cashier’s checks). However, wire transfers can be risky if you’re sending money – you need to be completely certain that you know who you’re sending the funds to (a wire transfer generally cannot 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 is true of mistakes that your employer makes (if they overpay by accident) as well as fraudulent transfers out of your account. However, there are rules about when and how banks authorize reversals, so most transfers are going to stay unless there was clearly fraud or a mistake.

With either type of transfer, you may need to provide information about your bank account (your account number, ABA number, etc.) to set things up. Those details can be used to steal funds from your account, so only provide that information if you trust the recipient.

Cost to Send and Receive

Wire transfers: there is almost always a fee to send a wire transfer. Banks might charge between $10 to $35 to send a wire within the United States, and international transfers cost more. Receiving a wire transfer is often free, but some banks and credit unions charge smaller fees to receive funds by wire. If you fund the transfer with your credit card, you'll pay much more due to higher interest rates and cash advance fees.

ACH transfers are almost always free – especially if you’re receiving funds in your account. Sending money to friends and family using apps or P2P payment services is usually $1 or so (if anything), and most businesses that send money by ACH pay less than $1 per payment.

The Process

Depending on your bank, there’s a decent chance that both wire transfers and ACH payments can be set up online.

However, some institutions require additional steps for wire transfers – especially when sending out large transfers. Your bank might require verification of wire transfers over the phone, and you might even have to use old-fashioned paper and submit a form (or a faxed image of a form, at least).

To send a wire transfer, you’ll provide information about your account and the account you want to send funds to: bank names, account numbers, ABA routing numbers, and so on (see where to find this information on a check).

To send an ACH transfer, you’d use much of the same information listed above (although your bank might use different routing numbers – ask customer service). If you’re using a P2P service, you might just need to provide the recipient’s mobile phone number or email address, and the recipient will provide their bank account information separately.

Common Uses

Because of the differences above, wire transfers and ACH transfers are geared towards different needs.

Wire transfers are best when speed and certainty are crucial – otherwise why pay the fee and take the extra steps to complete a wire? A common example is the down payment for a home purchase (the seller won’t release the title unless they’re certain you can pay).

ACH payments are good for small, frequent, non-mission-critical payments. As long as everybody involved trusts each other (more or less), it’s cost effective to use this automated system. Common examples of ACH payments include: