Transferring money is a part of life. Whether you need to pay someone or get paid, it’s important to choose the best transfer method that works for you.
ACH payments and wire transfers are two of the most common ways to transfer funds, but there are some key differences between them. Read on to find out what each service has to offer, how they work, and how to use them, so that you can choose the best service for your needs.
If you need to make an international money transfer, then try Wise - a cheap, fast and secure way to send money abroad!
Not sure what the differences are between these two methods? Let’s break down the difference between ACH and wire transfers.
ACH is short for Automated Clearing House¹. It is an electronic service used to transfer money between different banks’ accounts. ACH is the technology that allows you to make and receive direct deposits and pay bills online. It works via direct bank-to-bank transfers on the Automated Clearing House Network.
A wire transfer is also an electronic transfer service, that can be used to move money from one bank to another. The difference is that the SWIFT (Society for Worldwide Interbank Financial Telecommunication²) or Fedwire³ networks usually handle them.
ACH and wire transfers do the same thing, but their speed, security, and cost make each service suitable for particular situations.
Sometimes you need to make speedy transactions. A typical wire transfer will process within one business day if you submit it before your banks’ deadline, so the money will be ready promptly.
When transferring with ACH, the wait time can be up to a few business days. This means it's not the best option when you need to move money fast.
Having your money stolen or go missing is the stuff of nightmares.
ACH has security methods in place which cover both the sender and receiver of funds. With ACH, reversing transfers are possible in cases of payment error⁴, e.g. If the payment was for the wrong amount, the account number provided was incorrect, or duplicate transactions occur.
Wire transfers are also secure because the identity of customers is confirmed via the bank they open an account with. However, you need to double, triple check the recipient details are correct. There is no possibility to easily reverse the transfer. Once you send the wire transfer, your money is gone.
If you want to be as secure as possible when transferring money, ACH is the way to go.
A significant difference when comparing ACH vs wire transfer is the cost.
ACH transactions are almost always completely free for individuals to make and receive.
Wire transfers will cost you money, and the fees can really add up. Exactly what fees you pay will differ depending on which bank you make the wire transfer with. You can expect charges of around $15 for domestic and upwards of $40 for international wire transfers⁵.
|Speed||1-2 business days for domestic ACH payments. International ACH transfers can take several days to clear.||Domestic payments often within the hour. International swift payments within 1-5 business days|
|Security||Can be reversed in cases of fraud or payment error.||Customer identity is confirmed, but there is no easy way to reverse a transfer in case of fraud or payment error.|
|Cost to send||Often free, or under $3 per transaction||$10-$50 depending on destination|
|Cost to receive||Usually free||Most banks charge around $35 to receive international payments made using SWIFT|
If you are making and receiving small, non-urgent payments to people, ACH transfers will be the best for your needs.
Wire transfers are best for payments that need to occur as fast as possible where you don’t mind paying some fees, or you value speed over fees.
Wire transfers are also better for international transfers, as international ACH transfers are not yet widely accepted. Keep in mind that international wires can be very costly.
If you need to send an international transfer, then try Wise for fast and low-cost international transfers. You could save up to 8x compared to your bank.
To send a wire transfer via your bank, you will need⁶:
- Government-issued ID or online account access
- Bank account number
- Recipient name and contact details
- Recipient’s bank name and contact details
- Routing numbers for you and the recipient
- SWIFT code for international transfers
If you aren’t sure where to find your routing number, take a look in your online banking app or your checkbook. You can check this quick guide for help.
You can also try the handy Wise search tool, to help find your SWIFT code.
After you have gathered this information, you can set up the transfer via your online banking system, or in person at a local branch. Check to make sure all the information you have provided is correct, and remember to get a receipt.
You have two options⁷ when it comes to what type of ACH transfer to make.
ACH credit payments authorize your bank to send payments to the payee. The payee can deduct the owed amount from your account. This can be useful, for example, for paying recurring bills.
ACH debit payments are person-to-person payments, established by the payer. This can be useful for sending money to different bank accounts.
To make an ACH transfer you will need⁸:
- Routing number
- Account number
- Type of account (business or personal)
- Transaction amount
Once you have these details, you can then set up the transfer via your online banking system. For more information, you can also check out this guide to sending ACH transfers.
International ACH transfers are possible, but only a few banks provide this service, and it is not widely accepted⁹. Standard ACH transfers are only used for domestic transfers within the US.
You can send money abroad using an international wire transfer. International wire transfers are processed through SWIFT. The process can pass through several correspondent banks - also known as intermediaries¹⁰, and each one can place a small charge. This can add up, making international wires expensive. It can also take a long time for your funds to clear.
You can avoid the drawbacks of the SWIFT system with Wise. The Wise multi-currency account is a simple way to hold foreign currencies and send and receive payments. You can enjoy the speed and security of sending an international wire, but with a much lower and fairer fee.
You’ll also get the real mid-market rate (that’s the one you’ll find on Google). This can work out much cheaper than sending regular international wires.
- Nacha - What is ACH
- Nacha - ACH reversals
- Finder - Wire fees
- AmericanExpress - Details for wire
- NerdWallet - ACH types
- Tipalti - ACH details
- Tipalti - International ACH
- Frbservices - SWIFT process
Sources checked 19 February 2021
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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