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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless.The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each.The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand.
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Last editedJul 2022 — 2 min read
Imagine you are on vacation and you just ran out of money. Or you just started a new job and want to make sure you pay your rent on time. What about when you bought that autographed copy of the first Harry Potter book on eBay? How will you go about sending or receiving the necessary funds?
In this article, you will learn the difference between an ACH and wire transfer. These options are the most popular types of electronic money transfers. Keep on reading to figure out which one will meet your monetary needs.
What is a wire transfer?
Chances are, you already know about ACH transfers (but if you don’t, why not take a look at our guide). So, what about wire transfers?
A popular method of getting paid, a wire transfer immediately sends funds from one account to another. While the funds are usually available that same day of the transfer, it may not be visible in the recipient’s account. There is a fee associated with wire transfers. Depending on your financial institution, your bank or credit union may generally charge anywhere between $10-$35 to send a transfer within the US, with a higher cost for completing international transfers.
Differences between ACH and wire transfer
You may have asked yourself if an ACH is a wire transfer. Although the two terms may be used interchangeably, both options allow for a transfer of electronic funds. The following table details some of the main differences.
Key Differences Between an ACH Transfer vs. Wire Transfer
ACH Transfer
Wire Transfer
Speed
Typically, 2-3 business days
Instant or next day availability
Payment Options
Bank transfers
Bank transfer, credit card, debit card
Cost
Almost always free
Additional cost
Risk
More secure
Impossible to reverse
Another big difference between ACH and wire transfers is that wire transfers are available internationally, whereas ACH transfers are only available domestically. This is something to keep in mind when you travel outside the country.
Although an ACH transfer is quite safe, it is good to know that if a mistake is made by the sender, there is a possibility the transfer could be reversed.
ACH transfer vs. wire transfer: advantages and disadvantages
The process of transferring money can have its ups and downs, but you are still not sure what is better between an ACH or wire transfer? Keep on reading for some advantages and disadvantages between an ACH payment vs. wire transfer.
Some ACH transfer advantages include:
Considered a more secure option because of all the information required to send the transfer (i.e., routing/ABA number, account number, account type)
Moving toward same-day transfers, while some payments are currently eligible
Typically free for consumers, especially if receiving funds in an account
Read more about how make an ACH payment.
Advantages of a wire transfer:
Funds are usually available same day of the transfer
Payment options not only include bank transfers, but also credit and debit cards
Available internationally
ACH transfer disadvantages include:
Takes up to 3 business days to complete (read about instant ACH transfers here)
A transfer can be reversed if a mistake was made on the sender’s side
Only available domestically
Limited payment options that include a bank transfer only
Wire transfer disadvantages include the following:
Sometimes funds are not visible in the recipient account or recipient may not have access to funds immediately after a completed transfer is received
Funds must be available in sender’s account before bank sends funds because the bank immediately removes funds to process the request
If using a credit card, cost will be significantly higher due to interest rates and cash advance fees
Low risk to receive funds, but higher risk to send funds because transfers are fairly quick and impossible to reverse
What is better: ACH or wire transfer?
In the debate between an ACH payment vs. wire transfer, most of the time, people and businesses prefer the ACH transfer. Right now, the use of this transfer is at an all-time high because it’s seen as a relatively safe way to transfer funds.
On the other hand, if you are fighting against time, your best option is a wire transfer. Request it in the morning to allow plenty of time to complete the process. If you are looking to send or receive money internationally, keep in mind it can take an extra 1-2 days so, plan accordingly.
No matter what option you choose, make sure you are receiving a real transfer of funds instead of some type of scam.
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Both ACH and wire transfers work in a similar way, but with different timelines and rules. Wire transfers are direct, generally immediate transfers between two financial institutions. ACH transfers, meanwhile, pass through the Automated Clearing House, and can take up to a few business days.
When comparing the two, the advantage of wire transfers is the speed of the transaction. ACH transfers are more convenient, less expensive and more secure. If the funds need to be received immediately, go with wire transfer.If it's something that can potentially wait three days, use ACH transfer.
Sending money abroad — ACH vs international wire (SWIFT)
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.
Whereas wire transfers move directly between banks, ACH payments pass through a clearing house before reaching the final recipient's bank. This process means that ACH payments can take longer than wire transfers to clear—wire transfers usually clear within a day (and often within minutes) whereas ACH can take 2-5 days.
ACH credit transfer cost: Banks might charge a fee of around $3 for sending money between accounts that you have at different banks, but many offer these so-called external funds transfers for free. There's usually no fee to receive them.
If you initiate a transfer after the scheduled time, you may experience delays. This could result in missing payment deadlines and paying penalty fees. It also means that ACH transfers may not be appropriate for emergency or time-sensitive transactions.
As we've clarified, Zelle relies on ACH payment methods, as opposed to wire transfers. However, the platform also leverages its close connection with network banks to expedite processing making it seem closer to wire transfers in certain applications.
Wire transfers tend to be more expensive than ACH transfers. Within the US, wire transfers typically cost up to $35, while international wire transfers cost between $35 and $50. ACH transfers are often free to send and receive or cost just a few dollars.
Time is of the essence: An ACH transfer generally takes a day or two before money is deposited in the receiving bank account. With a wire transfer, the money may show up in the recipient's bank account the same day, and sometimes even instantly, especially if it's a domestic wire transfer.
Five to seven times cheaper than SWIFT, on average depending on your bank partner, Global ACH is much less expensive. Payees know precisely how much they'll receive. With Global ACH, there are no lifting or correspondent fees provided payments are initiated in USD and settled in local currency.
The maximum ACH transfer limit varies depending on your financial institution and account type. Potential limits range from $3,500 per day (Bank of America) to $25,000 per day (JPMorgan Chase) for personal checking and savings accounts.
Because wire transfers are made directly between financial institutions, they can generally be processed more quickly than ACH transfers can. Wire transfers are typically completed within the same business day but may take up to three business days.
Zelle payments are processed using the Automated Clearing House (ACH) network, but they are typically processed much faster than traditional ACH transfers. Zelle payments typically arrive in minutes, while ACH transfers can take up to 3 business days to clear.
Which banks allow ACH transfers? All banks in the United States can use ACH, as all that's needed to receive an ACH transfer is a valid bank account and routing number.
In addition to “insider employee fraud” typical examples of ACH scams include: Data breaches: Criminals often gain access to customer credentials via a data breach. In this scenario, fraudsters log into bank accounts with bought or stolen information from the dark web before withdrawing funds through the ACH network.
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