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

Automated clearing house (ACH) and wire transfers are two ways of electronically transferring money. But the way they transfer the money is different, and that can have an impact on the speed and cost of each process.

Depending on the circumstances, you don’t always get to choose which method of money transfer is used. But in case you do, it can be useful to understand the differences between ACH and wire transfers.

Key takeaways

  • An ACH transfer goes through an interbank system for verification before it’s completed.
  • A wire transfer goes directly and electronically from one bank account to another without an intermediary system.
  • ACH transfers typically have lower fees than wire transfers have.
  • Money sent with wire transfers is typically received faster than money sent with ACH transfers.

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What is an ACH transfer?

An ACH transaction electronically transfers funds in batches between banks and credit unions via a system known as the automated clearing house network. 

ACH can help you receive money via direct deposit—like paychecks, government benefits and tax refunds. It can also help you send money. Most banks’ and credit unions’ online bill-pay services use ACH. And peer-to-peer money transfer services like PayPal and Zelle® also use ACH as part of their services. 

Nacha, formerly known as the National Automated Clearinghouse Association, manages and governs the ACH network and “determines how funds are disbursed and settled among financial institutions,” according to the Consumer Financial Protection Bureau (CFPB).

What is a wire transfer?

A wire transfer is another way to send or receive money electronically between individuals or financial institutions. During a wire transfer, the funds are transferred directly from one bank or financial institution to another.

Wire transfers can be domestic or international. International transfers are sometimes called remittance transfers. You can send a wire transfer from your bank or a nonbank transfer service like Western Union.

The difference between ACH transfers and wire transfers

Transaction speed

It’s possible that both ACH transfers and wire transfers can be completed in the same business day. But typically there’s a difference in how quickly you might see the transaction completed. 

ACH transfers are routed through the ACH network in bundles and may be slowed down by internal review processes or otherwise processed on a delayed cycle. You can see an ACH transfer pending in an account for a few business days while the transaction is completed.

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.

Transaction safeguards for mistakes or fraud

The slower ACH process includes built-in protections against fraud. It also allows people more time to request a cancellation if there’s a problem with the transaction.

Wire transfers happen more quickly, so there’s less time to reverse a mistake or fraud. In most cases, wire transfers are final once they’ve been delivered to another bank account or financial institution. 

If you suspect fraud, the Federal Trade Commission recommends contacting the company or bank you sent it through as soon as possible to request a reversal of the wire transfer. 

Transaction costs

ACH transfers are typically free for most consumers, though some transactions may have a very small cost associated with them. ACH transfers are more likely to have fees for an expedited transfer schedule.

Wire transfers typically aren’t free. The price you might pay depends on several factors, like the financial institution and speed of the transfer. In general, you can expect to pay $10-$35.

ACH and wire transfer FAQs

ACH and wire transfers are usually used for different purposes. When you pay your bills online through a bank account, for example, that’s automatically handled via ACH transfer. 

But in other situations, like giving money to a friend or family member, the decision depends on what’s important to you. If you’re regularly transferring money to someone, an ACH transfer is typically cheaper, and you can schedule its delivery when you need it. A wire transfer may be a quicker option.

It depends on the type of transaction, the recipient or the financial institution, but it’s possible to make both ACH and wire payments domestically and internationally. 

For domestic consumers attempting to wire more than $15 overseas, the CFPB lists the following protections that must be provided:

You have the right to cancel a transaction within 30 minutes, as long as the money hasn’t been successfully deposited into another account or otherwise picked up.

If you have a complaint about a transaction, you have the right to contact the company to have it investigated.

ACH transfers vs. wire transfers in a nutshell

ACH transfers and wire transfers are both ways of transferring money electronically. You may end up using ACH without even realizing it. But if you have a choice, ACH transfers offer a cost-effective way to transfer money to a friend or family member for those flexible with scheduling. A wire transfer is more likely to go through on the same day, but it may come with a fee.

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