Personal finance

What’s The Difference Between ACH and Wire Transfers?

What's The Difference Between ACH and Wire Transfers

If you were to transfer funds from one country to another before the turn of the last century, you’d probably send an international money order or get in touch with your local bank for a telegraphic transfer. In both cases, there was no telling how much time it would take for the recipient to receive the money. However, technological advances in the recent past have changed the way we transfer money.

Now, most people pay their bills online and payroll checks make it to your bank accounts automatically. A one-time request ensures that your mortgage and credit card payments are never late. With no more than a few clicks, you may transfer money from your home in the U.S. to a friend who lives in Indonesia. In all such cases, the money goes through electronically. While there are different ways for this to happen, the two most common include ACH transfers and wire transfers.

What is ACH?

Automated Clearing House (ACH) is an electronic network created by the U.S. Federal Reserve Bank, for financial transactions in the U.S., and it facilitates transfer of funds between bank accounts. An ACH transfer involves information about payments being sent to the automated clearing house in a batch, which, in turn, clears them and forwards them to respective banks. The clearing house basically functions as a middleman.

International ACH payments refer to direct deposit of funds in overseas bank accounts using the given country’s clearing system. For example, while the National Automated Clearing House Association (NACHA) manages ACH transactions for banks in the U.S., the Single Euro Payments Area (SEPA) mechanism serves 34 countries in Europe. In Australia, Direct Entry is the equivalent of ACH.

What is a Wire Transfer?

A wire transfer involves the transfer of funds from one bank account directly into another. This kind of transfer takes place because of agreements set up by banks that establish guidelines and regulations. During a wire transfer, the process includes verification of both account holders and of adequate funds in the sender’s account. A wire transfer does not go through any middleman or clearing house and involves only the sending the receiving banks.

Prevalent Uses

While both methods transfer funds between accounts, differences in their processing makes each more suitable in some scenarios. ACH transfers are usually ideal for frequent, small, and non-critical payments. These can include automating your monthly utility bills, receiving your paycheck, moving funds between your own accounts, or paying vendors or suppliers. A wire transfer might be what you need when speed and certainty are important. ACH and wire transfers don’t necessarily take place between banks. For example, leading international fund transfer companies such as TransferWise, Western Union, and Ria rely on these methods to send and receive money.


In many cases, a wire transfer can take place within minutes, although it might take a few days in some scenarios. Typically, transferred funds make it to the recipient’s account on the same day. However, the process is not completely automated and might require human intervention in reviewing the transfer, which may cause a delay. For international wire transfers, give the process an added day or two. An ACH transfer may take two to three working days to go through, mainly because these payments process in batches and not individually. If you’re very close to the due date of your mortgage payment or if a friend needs money in a hurry, a wire transfer will be the way to go.


ACH transfers, in most cases, are fee-free, especially when it comes to receiving funds in your account. If you use the services of a peer-to-peer platform you’ll pay little to no fees at all because they rely on ACH transfers. A wire transfer, on the other hand, usually comes with a fee. Sending funds from the U.S. using a wire transfer can attract a fee of $10 to $40, and the fee increases for international transfers. In some instances, receiving banks charge fees for wire transfers too.

Setting up a Transfer

Depending on the bank or service provider you choose, there’s a good chance you will be able to initiate both types of transfers online. It you wish to send a large sum through a wire transfer, you may need to go through extra steps, which may include phone verification or submitting a manual form. You’ll also need to provide the recipient’s complete name and bank account details. You will need to provide similar details for an ACH transfer, but some money transfer companies let you send funds using no more than a recipient’s email address or phone number. In this case, the recipient then provides his or her bank account details.


Whether you should use an ACH transfer or a wire transfer depends on your needs as well as the methods offered by the bank or money transfer company you deal with. In both cases, money will move electronically and the safety of your funds is not much of a concern.

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