ACH vs. wire transfers: Which is the right payment option for my business?

Photo by  Christiann Koepke

Originally Posted On: ACH vs. wire transfers: What’s the difference? | QuickBooks (

The verdict is in: checks are out. Cash and checks used to be the norm for paychecks, birthdays, and more. But in our digital age, the electronic transfer of funds is now a necessity.

When it comes to digital payments, there are two main players: ACH transfers and wire transfers. While both are ways to send money electronically, they’re very different processes. Let’s review the differences between the two, so you can find the electronic transfer solution that works best for your business.

What is a wire transfer?

A wire transfer is an electronic payment that sends money from one bank account to a different bank. If you’ve ever used Western Union, you’ve made a wire transfer.

This type of transfer is known as an interbank payment. The payment is sent from the sender to their bank, then to the recipient’s bank, and finally to the recipient. In this way, the bank acts as the middleman for the payment.

Some people think of wire transfers as eChecks because they are a lot like an electronic version of a cashier’s check. As soon as the transfer is initiated, the funds are taken out of your account.

Unlike transferring money from your checking account to your savings account, a wire transfer does not require the bank accounts to be linked to one another. Instead, a wire transfer uses the recipient’s bank account number and ABA routing number. This is a unique 9-digit number that identifies each banking institution. If you don’t know your bank’s routing number, you can find it using a quick internet search.

What is a wire transfer?

An ACH transfer is another method of electronic payment. If you’ve ever used direct deposit or direct pay, you’ve taken part in an ACH transfer. An ACH transfer does not use the bank as a middleman. Instead, an ACH transfer is named for its use of the Automated Clearing House (ACH) network.

The ACH network is a network of banks and other financial institutions that uses batch processing to transfer funds from bank to bank. Essentially, these financial institutions group ACH transactions together and transfer these groups of transactions three times each day. This process is overseen by National Automated Clearing House Network (NACHA).

ACH payments fall into two different categories: direct deposit and direct payment.

ACH direct deposit

Direct deposits are ACH payments that are made from either a government entity or a business to an individual. To pay employees through direct deposit, you must use NACHA and ACH.

Graphic shows illustration of money, with text “Direct deposits include payments like: Paychecks, Tax refunds, Interest and annuity payments”

ACH direct payment

When an individual or company sends money through the ACH network, it is known as a direct payment. ACH direct payments use a debit and credit system to send money from one bank account to another. The money is debited from the sender’s bank account and credited to the recipient’s bank account. The sender will see an ACH debit in their account, whereas the recipient will see an ACH credit.

If you’ve ever used a payment app like PayPal or Venmo, you’ve made an ACH direct payment.

Key differences between ACH transfers and wire transfers

Though the two may be used interchangeably, ACH transactions and wire transactions are very different transfer services. Let’s look at the key differences between the two.

Chart indicates the difference between ACH and wire transfers based on five categories: Speed, Payment options, Cost, Global availability, and Risk.

ACH vs. wire transfer: Speed

When it comes to money transfer, transfer speed is always key. Recipients often don’t want to wait days and days for payment processing before their funds become available to them.

Wire transfer is king when it comes to transfer speed. When sending money domestically, wire transfer payments are always available by the next business day. In many cases, bank wires can even be available the same day, as long as you meet the bank’s deadline for same-day transfers.

ACH payments, on the other hand, can take up to three days for the bank transfer and the funds to become available, though most are available in 24 hours. That said, NACHA is moving toward faster fund availability throughout the ACH system. They are now offering next-day payments and can even do same day in some cases.

ACH vs. wire transfer: Payment Options

In most cases, ACH payments use direct payment from bank accounts as their payment method. If you wish to use other payment options, such as a credit card or debit card, you’ll often need to use a third-party payment app.

Wire transfers have more availability in terms of payment methods. Money can either be transferred from one bank account to another, or it can be sent using a credit or debit card.

ACH vs. wire transfer: Cost

If you’re looking for a cost-effective way to send money, ACH is the way to go. ACH transactions are almost always free for individuals, though when using payment services like PayPal or Venmo, they may cost around a dollar. Business owners and institutions that use ACH payments for direct deposit are required to pay a fee, but that cost is never charged to individuals. Therefore, ACH transfers can be a great choice for bill payments.

Wire transfers, on the other hand, have costs associated with them. Most domestic wire transfers cost between $10 and $35 to send, and the cost is higher for international wire transfers.

Graphic shows two arrows in cyclical pattern, with text “Domestic wire transfers cost between $10 and $35.

In addition, receiving banks will often charge the recipients a small fee for the transfer into their account.

It’s always wise to use a bank account or debit card to send a wire transfer. If you want to use a credit card, you’ll also face fees and interest associated with receiving a cash advance.

ACH vs. wire transfer: Global availability

While both services send money within the United States, only wire transfers offer international transfers to any international bank.

ACH only offers domestic money transfers, although they do have a partner system called Global ACH that can transfer internationally through other bank-to-bank networks.

ACH vs. wire transfer: Risk

ACH payments are certainly considered the more secure payment option for senders, as they use the NACHA and ACH network. If money is sent in error or by mistake, there are ways to reverse the payment.

While there are a few scams associated with ACH payments, they typically require you to enter a significant amount of bank account information. This makes them much harder to fall victim to.

Wire transfer, on the other hand, is a less secure system for money senders. Wire transfer payments are fairly instant and impossible to reverse. In the event that your money is transferred in error or as a result of fraud, it’s impossible to ever get back.

Recipients of wire transfers, on the other hand, don’t have too much to worry about. The funds are accessible immediately, and it is impossible for a sender to fake a wire transfer.

ACH vs wire transfer: Which is the better payment option?

While there are certainly pros and cons to each method of fund transfer, there are only a few scenarios in which wire transfer will be the better payment option for your needs. The majority of businesses use ACH payments, and these types of money transfer are considerably less expensive while offering more security. Unless you need your money to arrive that same day, ACH payments are a great option.

In the event that you do need to send money for same-day delivery, or you need to send money internationally, wire transfers may be your best option. However, always be sure to verify your recipient and their legitimacy.

With QuickBooks Payments you can accept a variety of payment types, including ACH payments and eChecks, and debit and credit cards. Get your money when you need it, with options to receive payment instantly or the next day. Online invoicing, mobile payment processing, and recurring payments make it easy for you to get paid and focus on your business.

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