If you want to send money to another state or overseas to someone, bank transfers are one of the simplest and safest ways to get that done.
ACH transfers and wire transfers are two different ways of transferring funds from one bank account to another.
Read on to discover what the difference is between ACH transfers and wire transfers.
Key Differences Between ACH Transfers and Wire Transfers
There are different advantages to each method based on its cost and transfer speed.
ACH transfers send your money to an automated clearing house, which then transfers the funds to the account requested.
Wire transfers cut out the middleman and send the money directly to the account requested.
Both options require you to supply the bank account number or the routing number of the recipient, so the funds may be directly deposited into the correct account.
They are both electronic forms of payment that eliminate the need to send cash or use cashier’s checks to send money overseas. You can transfer cashier’s checks through a bank wire at a cash counter if necessary.
Electronic transfers are a great way to send funds overseas. An automated clearing house (ACH) transfer is an electronic transfer of funds from one account to another.
The money is drawn from the sending account and is sent to an automated clearing house. Once the funds have been cleared by the sender’s bank, the ACH then transfers the money to the recipient account, in the requested currency.
The sender will be charged for the transfer and exchange rate fees.
A wire transfer is when funds go directly from one bank to another and the recipient bank clears the payment themselves. This eliminates the middleman.
A wire transfer is an electronic transfer from one bank account to another or directly from a cash counter. With the recipient account number, you can offer a fast direct deposit to the recipient.
ACH Transfer vs. Wire Transfer: The Transfer Speed
An ACH transfer has a slightly longer route to follow. The automated clearing house must clear the payment first and then sends it off to the recipient. This process normally takes several business days.
The delay is largely due to the account verification process. The ACH must verify the sender’s account and wait for the bank to actually release the funds. Once the funds have been released and the ACH has them, the funds can be verified and sent over to the appropriate account.
A wire transfer—whether an international or a domestic wire transfer—can be a quicker alternative. It often can be completed within as little as a single business day or even within a few days, depending on the location of the recipient account.
How Much Does Each Transfer Method Cost?
An ACH payment is very inexpensive. It usually costs the sender around $3 to send an ACH transfer. For the recipient, an ACH transfer is typically free.
A wire transfer costs a bit more. Costs can range from $10 to $50 depending on the recipient’s bank account location and the amount of the transfer. For the recipient, many financial institutions charge a fee for processing and accepting the transfer, as well. Transfer fees will vary by the banking institution.
How Secure Are These Transfer Methods?
ACH payments are very secure, as a third party confirms the funds before dispatching them to the recipient. This can offer security with less risk of fraud.
Wire transfers are also secure. Money transfer companies and banks are heavily regulated and follow standards to ensure safety.
The following tips will help keep you safe:
- Use multi-factor authentication when sending with a mobile app.
- Sign out of websites if you use a public computer.
- Always use your own phone to wire money if using an app.
- Use your own Wi-Fi or data connection if possible.
- Make sure that your chosen service offers account security for sending money.
- Don’t send payments to people you do not know.
Never share your account information with others.
ACH vs. Wire Transfers: Which Option Is Best For You?
To select the right transfer method, you’ll have to evaluate your needs. Consider these factors when choosing the method that works best for you:
The first thing to consider is your timeline. Transfer speed may be the deciding factor for you if the recipient account needs the funds within a short time frame. If several days is too long, you may want to go with a wire transfer.
If time isn’t a concern, then you may be better off choosing the least expensive method, which is the ACH payment method.
Here are a few points to keep in mind about each transfer process.
- Can take several days (often at least three to four)
- You can both send and request funds
- Inexpensive or free
- Can be faster than ACH transfer
- Payments can only be sent, not requested
- Can cost both the sender and the recipient
When to Use Wire Transfers
You can easily use these electronic transfers to send funds to family and friends, or use them for bill payments.
Regular bill payments can be made through either one of these methods. Just keep the payment due date in mind when making the transfer to ensure the funds are received at the right time.
There are many payment options and transfer services you can use for everyday bill payments. You can check with your financial institution or your service provider to find out which payment method is best for your needs. You can also set up your payments in advance for recurring payments.
Payment Service for Small Business
ACH transfers and wire transfers can be used by small businesses to pay bills from suppliers.
Other than using a debit card, credit card, PayPal, or Venmo, some business owners prefer direct bank transfer. They may also prefer an automated clearing house network.. This is still an electronic payment that can simplify the bill payment process for businesses and promise great security between different banks.
You do need to obtain and share the recipient bank account number with the ACH network, but this is safe to do.
What Is ACH Credit?
ACH credit is a promise to arrange for payment from your account directly to the recipient. However, it is not automated.
You may have ACH credit to ensure your funds are set aside for a specific payment or transfer, but only the sender can authorize the release of the funds to the ACH network, where it will be cleared and pushed to the recipient account.
This is not to be confused with ACH debit, which is when the promised funds are drawn from the account by the recipient or the ACH network. Once the ACH debit is arranged, the sender is no longer in control of when the funds will be dispatched.
ACH transactions are a way to eliminate the use of
- paper checks like personal checks or cashier’s checks
- mailing cash
- bank transfers
ACH transactions are direct payment options that offer security for both the sender and the receiver. Wire transfers are also an electronic form of sending payment and since they’re rather quick, they are often a solid choice for many individuals or small business accounts.
Remitly makes international money transfers faster, easier, more transparent, and more affordable. Our reliable and easy-to-use mobile app is trusted by over 5 million people around the world.
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