ACH vs wire transfer: what's the difference?

Panna Kemenes

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!

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ACH vs wire transfers: overview

ACHWire
SpeedSame day, next day or 2-day payment options¹Domestic payments can arrive on the same day, international transfers may take several days
SettlementSent directly to bank accounts, some options for reversal where mistakes occurSent directly to bank accounts, little option for reversal if you make a mistake
PriceUsually low costFees vary, international wires can have high fees
DirectionACH payments can be ‘pushed’ by the sender, or ‘pulled’ by the recipientWires are ‘pushed’ by the sender initiating the transfer
ProcessingPayments are processed in batches, several times a dayPayments start to be processed instantly if initiated in banking hours
LimitsVariable limits based on provider — usually relatively lowVariable limits based on provider — usually relatively high
SecuritySafe to use with common sense precautionsSafe to use with common sense precautions
Country availabilityPrimarily used in the US onlyGlobally available

ACH transfers

Let’s walk through what an ACH transfer is, how it works and when you might use one. We’ll dive into the details about wires — and how they compare — in just a moment.

How do ACH transfers work?

ACH is short for Automated Clearing House. 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.

You have two options when it comes to what type of ACH transfer² 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 or person-to-organization payments, established by the payer. This can be useful for sending money to different bank accounts.

🎯 To make an ACH transfer you will need:
  • Name

  • 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 our guide to sending ACH transfers

Which type of transfers can you do via ACH

ACH debit transfers are very useful for paying recurring bills, such as your rent or utilities. You’ll be able to authorize the payment once, and then agree on a transfer schedule.

Your regular transfers are then automated, so you don’t need to mail checks or remember to pay your bills every month.

You can also receive ACH direct deposits — such as getting your salary, benefits or other payments from institutions and organizations — right into your bank or credit union account for convenience.

Wire transfers

Wire transfers are a little different to ACH payments. Wires can be sent through several different payment processing organizations, like SWIFT³ or Fedwire⁴, with most banks offering both domestic and international wire transfer options to customers. Let’s look at how a wire payment works.

How do wire transfers work?

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 Telecommunication) or Fedwire networks usually handle them.

🎯 To send a wire transfer via your bank, you will usually need:
  • Recipient name and contact details

  • Recipient’s bank name and contact details

  • Routing numbers for 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 our 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 y

our 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.

Which type of payments can you do via wire?

Wire transfers are often used for urgent, high value and international payments. That’s because wires are normally more expensive to set up compared to ACH transfers, but they can arrive faster if you’re sending within the US.

What are the differences between ACH and wire transfers?

Not sure what the differences are between these two methods? Let’s break down the difference between ACH and wire transfers.

ACH and wire transfers do the same thing, but their speed, security, and cost make each service suitable for particular situations.

Here are the key factors you’ll need to consider when deciding if a wire or an ACH is better for you.

Transfer speed

Sometimes you need to make speedy transactions. A typical domestic 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 depending on the service you select. This means it's not the best option when you need to move money fast.

Payment settlement

Both ACH and wire transfers are deposited right into the recipient bank account for convenience.

The main difference in how this works is that ACH payments are more commonly used for US dollar transfers while wires can often be made both in the US and around the world, with currency conversion taking place before the funds are deposited in the destination country.

If you make a mistake when sending an ACH you may be able to ask your bank to reverse it. This is not usually possible when sending a bank wire.

Security

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 error⁵, 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.

Cost

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 $25 — $30 for domestic and upwards of $40 for international wire transfers⁶.

Direction

We mentioned earlier that there are 2 different types of ACH payment, ‘pull’ payments and ‘push’ payments.

This means that you can either set up an ACH push payment, in which you initiate the transfer of funds to another account manually — or an ACH pull payment which lets you give permission to an organization to withdraw funds from your account according to an agreed schedule. This service is handy for paying regular bills for example.

Wire payments aren’t usually offered as ‘pull’ payments — you’ll need to initiate the transfer at the point you want to move the money, or schedule and authorize all of your payments in advance.

Processing

ACH payment instructions are collected up and processed in batches throughout the banking day. Wire payments on the other hand can start to be processed instantly if you’re arranging a payment in banking hours, and hit your own bank’s cut off times.

Limits

Individual banks can set their own limits for both ACH and wire payments, which can vary widely depending on the payment details and your specific account type.

However, ACH transfers may have lower limits for retail customers, with wire payments being favored for high value transfers. If you’re unsure of the limits which apply to your specific account, you’ll be able to reach out to your bank or credit union directly.

Country availability

ACH payments are mainly offered within the US, for US dollar payments only. Bank wires are often provided in a range of currencies, so you can send money here in the US, or to individuals and organizations overseas.

Which is better — ACH or wire transfer?

FeatureACHWire transfer
SpeedSame day, next day or 2-day payment options¹Domestic payments often within the hour. International payments within 1 - 5 business days
SecurityCan 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 sendOften free, or under $3 per transactionAround $50 depending on destination
Cost to receiveUsually freeMost banks charge around $15 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.

Sending money overseas? Choose Wise for low fees and a fast delivery time
Send money in 50+ currencies, right from your smart device or laptop. Pay in USD using an ACH or wire, and have your money converted with the mid-market exchange rate, and deposited into your recipient’s account in the currency they need. 

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Sending money abroad — ACH vs international wire (SWIFT)

International ACH transfers are possible, but only a few banks provide this service, and it is not widely accepted. 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 normally processed through SWIFT.

The process can pass through several correspondent banks — also known as intermediaries, 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.

Wise — an easy way to send money abroad


You can avoid the drawbacks of the SWIFT system with Wise. Send money to 70+ countries, in 50+ currencies — right from your phone or laptop.

Wise always uses the mid-market exchange rate (that’s the one you’ll find on Google), with low, transparent fees for international transfers.

That means you can enjoy the speed and security of sending an international wire, but costs that can be significantly lower than regular bank SWIFT charges.

Here’s what you can do with Wise:
  • Hold 50+ currencies in your Wise Account

  • Switch between currencies when you need to with the Google exchange rate

  • Send low cost payments to 70+ countries

  • Get your own local bank details for fee free payments in 10 currencies

  • Spend around the world with your linked Wise debit card

This way to hassle
free international payments

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information

How are ACH and wire transfers developing?

Both ACH and wire transfers are developing and improving all the time.

With ACH that means faster payments, more options in terms of delivery time, and ways for businesses to verify and check customers more easily. This boosts security, and allows providers to offer a broader range of services.

Wire transfers can also be used in more ways now, including through specialist services like Wise which lets you pay for an international transfer using a domestic USD wire or ACH.

That means you can send your money to Wise in dollars — which usually means a lower fee from your bank — and have it deposited in the currency you need, without incurring your own bank’s international payment and conversion costs.


Sources:

  1. Nacha - Payment myths
  2. Nacha - What is ACH
  3. SWIFT
  4. Fedwire
  5. Nacha - ACH reversals
  6. Finder - Wire fees

Sources checked 02.19.2023


Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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