Wire vs. ACH transfers: What’s the difference?

Last updated on July 8th, 2022 at 03:50 am

Wire vs ACH: woman using a laptop and holding a credit card

With the rise of mobile technology and internet access, electronic banking has become more popular. When sending money to another state or overseas, for example, electronic bank transfers can be fast and convenient. Two common methods for completing such electronic transfers in the U.S. are ACH (automatic clearing house) transfers and wire transfers. While both types of transfers help move money between bank accounts, they work differently. 


Learn the differences between wire vs. ACH transfers as well as how each option works.

Wire vs ACH transfers: The key differences

Man writing on a notebook

Both wire and ACH transfers are types of electronic payments. They eliminate the need to send cash or use physical checks. They have some basic things in common: you’ll need to know a recipient’s account number, for example, and you’ll pay some kind of fee, which can vary.

If you’re curious about the difference between wire vs ACH transfers, they mostly differ in terms of cost and speed. 

What are ACH transfers?

ACH is governed by the National Automated Clearing House Association, or NACHA. 

An automated clearing house (ACH) transfer is an electronic transfer of funds from one account to another that occurs in batches

Let’s break it down. When a financial institution starts a transfer, that transfer gets put into a batch with other ACH transfers. The automated clearing house network processes these together at a certain point in the business day. 

After that, the receiving bank is able to process the transfer, and the money goes into the designated accounts.

ACH transfers can be used to make payments to other countries from the United States as well.

What are wire transfers?

A wire transfer is an electronic transfer from one bank account to another. They can be domestic or international.

ACH payments are more likely to be used for bill payments and ordinary deposits, whereas wire transfers are more common for sending large amounts.

A wire transfer will require information like a recipient’s account number, their contact information, and usually a routing number or SWIFT code.

What’s the transfer speed of wire vs ACH?

For ACH, the automated clearing house must clear the payment first before sending it to the recipient. Once the funds have been released and the ACH has them, the funds can be verified and sent over to the recipient’s account. This process can take at least a few business days.

Recently, NACHA has increased the same-day ACH limit as this method has grown in popularity. However, not all ACH transfers will be same-day.

A wire transfer may be completed as fast as within a single business day, depending on the location of the recipient’s banking account. However, it’s best to check with the financial institution to find out their delivery estimates.

What are the costs of ACH vs wire transfers?

Person holding a phone

At the time of writing, the Association for Financial Professionals says it costs anywhere from $3 to send an ACH transfer, although it could cost as much as $10 per transaction. For the recipient, an ACH is typically free.

A wire transfer can cost a bit more. At the time of writing, costs may range from $15 to $50, depending on the recipient’s location and the amount of the transfer. Keep in mind that most banks have per-transaction or per-day transfer limits in place.

For the recipient, many financial institutions charge a fee for processing and accepting the transfer, too. Overall, wire transfer fees will vary by banking institution.

How secure are these transfer methods?

Both types of transfers are regulated to prevent abuse and fraud. In general, money transfer companies and banks are heavily regulated.

To be safe, be sure to follow best practices for online banking and payments. Only send money to recipients you trust. Keep your personal information secure and don’t share passwords.

How is ACH used?

ACH transactions can be used to both send money (known as ACH debit) and receive money (known as ACH credit.

Bill pay is one way ACH is commonly used. For example, your bank may offer a service that sends bill payments on your behalf from your account. You may even be able to set up automatically recurring payments. These ACH transfers can often be initiated through your online banking portal. 

Similarly, if you’ve ever made a payment online using an echeck, you were using an ACH transfer.

ACH transfers are also used by companies or small business owners that offer direct payment options. When you receive your paycheck via direct deposit instead of via a paper check, your employer is likely using ACH transfer.

Finally, some digital wallet apps that offer money transfer services, like PayPal and Venmo, will offer an ACH payment method.

How are wire transfers used?

Wire transfers can be used in the same ways ACH transfers can be used: to send money to friends and family, to receive payment for work, or to pay bills. 

They can also be used when you need to transfer large amounts of money, such as for real estate transactions.

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