A complete guide to ACH money transfers online

6 minute read

If you need to send some money to a friend or family member overseas or have an overseas invoice to settle, you have a few payment options.

You might be considering using an ACH payment, which is why you’ve gone searching for info. It can be a little confusing but don’t worry — we’ve got you covered.

Read on for all you need to know about ACH transfers — including when to use them and how to make an international ACH for a cheap and safe overseas payment. You'll also read about Wise and how you can save money when making international transfers.

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What is ACH bank transfer?

ACH stands for Automated Clearing House.

Each day, banks and corporations all over America gather ACH withdrawal and deposit requests into batches and send them to the centralized Automated Clearing House at set times. From there, the Clearing House sends the credit or debit transaction requests out, generally the next morning.

The system isn’t the fastest — it can sometimes take several days for a payment or a deduction to clear — but the cost is low. Most ACH transfers are free or only a few cents per transaction.

You may not realize it, but it’s possible you’ve used the ACH system before. Maybe you used your bank’s online billpay, sent money through Bank of America’s next day or 3-day transfers, had your paycheck deposited directly into your bank account, were the recipient of Government benefits, or sent an “electronic check” to pay a company.

All of these could have been ACH transactions, but under a different name. Regardless of whether you’ve used ACH or not, though, it’s a low-cost transfer method that’s picking up in the United States. And something worth learning about.

There are a few downsides to the system, though. In most European countries, for example, regular people can simply log into their online banking and send a transfer to someone else in a few easy steps. This isn’t the case for the American ACH system. Many US banks aren’t set up to allow customers to make easy ACH withdrawals or deposits into other bank accounts.

Another downside to those who have a bit more international lifestyle is that, by and large, ACH transfers are almost exclusively domestic and used only within the US. Though International ACH Transactions (IATs) are technically possible these days, they aren’t yet widely accepted.

International ACH vs Wire transfer

ACH and Wire are different. ACH payments, as you might have already gathered, aren’t usually the fastest way to move money — but they are secure and cheap. ACH transfers are sent by banks in batches and processed through a central body, often overnight, which then distributes the requests to institutions across the US.

Wires, unlike ACH transfers, are processed individually and sent straight from the sending bank to the receiving bank. They’re also usually much faster. Domestic wires are processed almost instantly whereas ACH transfers generally take 1-2 business days to clear a bank account. Typically, however, there are much higher fees associated with wires- be they domestic or international.

If you’re curious, here are a number of differences between ACH payments and bank wire transfers.

Feature comparisonACH PaymentBank wire transfer
Domestic vs. international paymentsAlmost entirely used for domestic transfers, although international transfers are becoming more commonUsed for both domestic and international payments via the SWIFT system
Price to sendOften free, or under $3 per transactionWires cost $10-$50 depending on destination
Price to receiveUsually freeGenerally your bank charges you somewhere around $35 to receive international payments made using SWIFT
Speed1-2 business days for domestic ACH paymentsDomestic payments often within the hour, international swift payments timeframe 1-5 business days
Used to deduct from your accountYesNo
Used to send money out from your accountDepends on the bankYes
Used to deposit money into your accountYesYes

What is an International ACH Transfer? Is it different than an International ACH Transaction (IAT)?

It’s helpful to know that there’s a difference between a Global ACH or International ACH Transfer and an International ACH Transaction (IAT). IATs aren’t really a system to move money itself, it’s more about the reporting. IATs are governed by the National Automated Clearing House Association (NACHA) as a way to monitor and report international transactions in order to be compliant with OFAC.¹

Though Global/International ACH transfers are technically possible these days, it’s rarely as simple as strolling into your bank and ordering one. Unfortunately for most US-based customers, only select US banks have a system in place that’s able to provide international ACH services.² You can try enquiring with yours to see if it’s an option to sending your money overseas.

However, you aren’t completely out of luck, however. There are ways to send an ACH transfer with most banks and have your money end up overseas. And that’s by using an intermediary money transfer service like Wise.

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How to do an ACH transfer: Step by step instructions

Though it’s rare that your bank would be able to set up an international ACH payment directly for you, Wise could be your solution.

Wise cuts your international transfer fees with their smart new technology that connects local bank accounts all over the world. Which means you can skip hefty international fees altogether — and also use the ACH system to send your money abroad. 🌏

Here’s how.

Step 1: Gather your own banking details

Using Wise will conveniently allow you to debit directly from your US bank account using the ACH system online.

So here’s what you’ll need to have ready:

  • Your online bank login info Because it’s so easy and convenient to debit from your bank account via ACH, Wise has set up a few extra security measures for your protection. That involves the need for you to log in to your bank online through the Wise site to prove you’re the rightful owner. Which means you’ll need to have your online banking username, password, and any extra passcodes at the ready.
  • Your checkbook To tell Wise which account to debit from, you’ll need your 9-digit ACH routing number and account number. These numbers can normally be found at the bottom of your checks or in your online banking.
  • Your SSN and/or ID Just like when you set up a bank account you need to give your bank information to verify your identity, you’ll likely need to do the same with Wise. As a security precaution, you may be asked to enter your SSN and/or upload an image of one of your government-issued IDs.

Step 2: Get your recipient’s local bank details

When you send money internationally, you generally need, well, international bank details.

However, because Wise works by a series of local bank transfers, the details you’ll need for your recipient will likely vary from the details you’re used to using.

In a vast majority of cases, when you use Wise you’ll need your recipient’s domestic bank details rather than international. That means if you normally use a SWIFT code and account number to send money overseas, you’ll want to check in with your recipient again to get their local equivalent.

Exactly what’s needed from your recipient depends on where you’re sending the money, as local legislation might require additional details. Here’s the list of what you might need the first time you send money to someone:

  • Name Your recipient’s full name as it appears on their bank account.
  • Routing number equivalent (if applicable) The recipient country’s local equivalent of a routing number if it exists. Note that you may already have a BIC/SWIFT code for your recipient, but you may need something different if you’re using Wise. For example a BSB code in Australia, an IFSC code in India, a Sort code in the UK, and Institution and transit numbers in Canada. In cases like Mexico (CLABE) and Europe (IBAN), you may have only one number for both the account number and routing number equivalent.
  • Account number Your recipient’s local bank account number.
  • Type of account The type of account such as personal, business, or savings.
  • Email Your recipient’s email address if you want them to be informed when your money’s sent out to them.
  • Recipient address You’ll need a physical address for your recipient; generally PO boxes aren’t allowed.

Of course, to make sure your transfer can be processed quickly and safely, you’ll want to check, double check, and possibly re-check the details for your recipient.

Step 3: Create or log into your account with Wise

If you already have a Wise account, you can simply log in. If not, you can create a new account now in just a few simple steps.

Head over to the Wise home page, and click on the Sign up button — it’s in the top right corner of the webpage. Here you can either enter your email address and choose your password, or log in using your gmail account and create your first Wise account.

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Step 4: Enter the transaction details

Wise walks you through what you need to do step by step. But if you want a heads up beforehand, here’s how your transfer will go:

  1. Amounts and currencies If you’re already logged in, you’ll click on the green Send Money button. Choose the amounts and currencies you’re sending.
  2. Your info Just like when you open a bank account you need to give the bank your personal information like full name and address, the same goes with Wise. Fill in your personal information and, if prompted, enter your SSN and/or upload your ID.
  3. Recipient info Fill in the recipient info you gathered.
  4. Confirm Wise always gives you the best possible exchange rate. That means if you check the rate you get against the rate you find on Google, there shouldn’t be much of a difference if at all. On this step you can double check the price and exchange rate as well as enter any reference.

Step 5: Select ‘Bank debit (ACH)’ when you confirm how you’d like to pay and follow the steps set out

So far, so simple.

On the final step in Wise you’ll need to choose how you will pay. Depending on the amount, you may be able to pay via a number of different options such as domestic wire transfer, Apple Pay, debit card, credit card, and bank debit (ACH).

Here, to pay via ACH, you’ll want to select Bank debit (ACH). Wise will walk you through how to pay via bank debit step by step.

And that’s it. Wise will debit the money from your bank account in the next 1-2 business days.

Now you can sit back and wait for the rest to happen.

1. Tipalti Global ACH
2. International ACH- Biz Journal

All source checked as of 18 December, 2020

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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