ACH vs. Wire


What is the difference between a wire transfer and an ACH?

Wire transfers can be executed more quickly than ACH transfers, but are also more expensive. Both payment methods involve transferring funds from one account to another; Wire transfers are done directly between a sending and receiving account, while ACH transfers use the automated clearinghouse as an intermediary of sorts.

Isn’t ACH the same as a wire transfer? Absolutely not! ACH and wire transfer are both bank-to-bank payment methods to send money electronically and both can be used for many business-to-business payments such as supplier payments, affiliate payments, or vendor payments. However, there are intrinsic differences between the two.

What is a Wire Transfer

Wire transfers are used to transfer funds directly from one bank account to another often requiring only an account and routing number. It does not have the cross-border payment limitation that ACH does, in that you can send funds to a bank outside the United States.

Funds also land once the wire goes through assuring the payee obtains the funds sooner. Despite the fact that wire transfers have been used to transfer money for years, there are some drawbacks. When sending money via a wire transfer, especially at high volumes, fees associated with such a transaction can be quite high. Many banks charge double-digit fees to either send or receive a wire transfer. International wire transfers are even more expensive.

Fees aside, another drawback is that once funds have been wired, because of the immediacy, recalling erroneous transactions is much more difficult, involving bank investigations and service fees.

What is an ACH transaction

ACH stands for Automated Clearinghouse (not to be confused with Publishers Clearing House), a network of banks that are batching transactions between them. It is also known as “direct deposit.” For example, when you are enrolled in automatic bill-pay, whether it be for a credit card or an insurance payment, often an ACH transfer is being used. ACH transfers are generally done in groups or batches and can take anywhere from a few hours to several days to be completed.

ACH transfers are also lower cost than wire transfers but they land in the payee’s account later, which delays when you can verify that the payment was received. ACH is also a US only network, thus not available to payees outside the United States.

Online marketplaces and monetizations networks with a growing number of partner payments to make, often rely on an ACH API or a bank API to make these payments.

“ACH transfers are generally lower cost than wire transfers but they land in the payee’s account later, which delays when you can verify that the payment was received.”

When comparing domestic ACH vs. wire transfers, it is important to think about all factors involved. How much are you going to be charged to send a wire? What are the risks associated? What timeframe does the transaction need to be completed in? What is the size and frequency of the transfer?

Wire transfers are often a more ‘known’ and familiar method of transferring funds. Wire transfers can move funds quickly between accounts (even between different banks or financial institutions) and can even be leveraged for cross-border payments. Wire transfers are generally used when reliability and speed are critical factors.

ACH transfers are increasingly becoming the go-to payment method, especially for mass payments. Lower cost and less risk (in some cases) make ACH an attractive option. ACH payments tend to be better suited for transactions where the amount is smaller or the frequency is more regular.

Read Our Wire Transfer Guide

More about ACH transfers and payments

An ACH payment is an electronic money transfer made through the Automated Clearing House. The ACH network electronically processes large numbers of transactions in a single batch. The batch processing method used in ACH transfers means that sometimes payments can take several days to clear and settle.

Like many other payment methods, ACH transfers are financial transactions that move funds from one account to another. ACH is a payment method of choice among public and private entities alike. Both small businesses, as well as enterprise corporations, use ACH as a payment method.  ACH transfers are commonly used for B2B payments as well as B2C payments. In some cases such as automatic bill-pay, ACH transfers are also used in C2B transfers (consumer to business).

To execute an ACH transfer, the originator needs the bank account number and routing number (ABA RTN) of the payee. These are the same numbers that are generally found at the bottom of a check – or they can be provided by the banking institution. ACH transfers can be sent by the payer individually or in batches, but they are almost always processed by the Automated Clearing House in batches.


In some cases, An ACH transfer is colloquially referred to as an EFT or electronic funds transfer. EFT is an ‘umbrella’ term that encompasses various types of financial transactions including ACH transfers.  The difference between ACH and EFT is specificity. An ACH, by default, is an EFT – but an EFT is not always an ACH transfer. An EFT is simply an electronic transfer of funds between accounts. EFT transactions can be between different accounts within the same bank or financial institution or across multiple banks. In addition to ACH payments, EFT payments include everything from eChecks to ATM or POS transactions.

Who uses ACH transfers?

ACH transfers are becoming increasingly common as they replace checks for a variety of applications including payroll (direct deposit) and bill pay. As businesses and accounting organizations digitize their accounts payable processes, ACH has become a payment method of choice for many supplier and vendor payments. Many corporations, both large and small, use ACH transfers for their B2B payments. Digital economy businesses such as AirBNB or Uber often rely on ACH transfers for their partner payouts (especially domestic).