ACH Transfer vs. Wire Transfer: What’s the Difference?

29 Aug 2023


When it comes to electronic money transfers, two commonly used methods are wire transfers and – especially for transferring funds within the US – Automated Clearing House (ACH) transfers. While both serve the purpose of making a bank transfer, they employ different mechanisms which makes a difference in terms of cost and speed of the transaction.

While not everyone has the freedom to choose their transfer method, understanding the pros and cons can be beneficial. In this guide, we’ll delve into the workings of both ACH and wire transfers, examine their advantages and drawbacks, and help you make an informed decision if you have the option to choose.

What is an ACH transfer?

ACH transfers facilitate the digital movement of funds between banks and credit unions using the Automated Clearing House network. Widely used in the US by banks and peer-to-peer services like Venmo and PayPal, these transfers are regulated by NACHA (formerly the National Automated Clearing House Association).

NACHA oversees the settlement and distribution of funds among financial institutions. Despite their efficiency, ACH transfers take longer due to the need for interbank verification. However, they are generally more cost-effective compared to wire transfers.

What is a wire transfer?

In contrast, wire transfers also enable electronic money transfers, but they bypass intermediaries like the ACH. Instead, funds travel directly from one financial institution to another. Wire transfers can be executed domestically or internationally, and some options like Western Union even allow non-bank wire transfers.

Differences between ACH and wire transfers

Three crucial distinctions set ACH and wire transfers apart:

1. Transaction speed

While both types of transfers can be completed within a single business day, ACH transfers tend to take longer due to the intermediate approval process. Wire transfers, on the other hand, are typically processed on the same day, although delays are possible.

2. Cost

ACH transfers are usually less expensive, with consumers sometimes being offered the option to pay extra for expedited transactions. In contrast, wire transfers are often more costly, influenced by factors such as processing speed and the transfer amount.

3. Fraud protection

ACH transfers benefit from built-in fraud protection within the ACH network, with the extended processing window allowing users to detect and cancel suspicious transactions. Wire transfers, processed faster, offer less opportunity to halt transactions, making them more susceptible to fraud. Reversing a wire transfer is usually not possible, necessitating prompt contact with the respective financial institution in case of suspected fraud.

Sending money with ACH and wire transfers at Zenus Bank

Zenus Bank provides options for both ACH and wire transfers, along with additional methods for sending and receiving money. Deciding between the two hinges on factors like speed and cost. For urgent transfers, wire transfers are preferred, while ACH transfers are a more cost-effective alternative when time is not a constraint.

ACH and wire transfer FAQs

  • Which is faster, ACH or wire transfer?

Typically, wire transfers are processed faster than ACH transfers. This is because ACH transfers need to be processed through the ACH network, which can slow down the transaction.

  • Which is safer, ACH or wire transfer?

ACH transfers are typically safer than wire transfers. The ACH network has built-in fraud protection procedures, and the longer process times enable users to cancel fraudulent transactions more easily. Wire transfers are usually final once the money has been transferred between accounts.

  • What is the cost of an ACH vs wire transfer?

It is hard to pinpoint the price of an ACH transfer since each financial services institution can set its own prices, and sometimes you may also be charged an extra fee for expediting the processing time. Generally speaking, though, ACH transfers are quite affordable. Wire transfers tend to be more expensive, and they cost anywhere from $25 up to $50, though this price can also fluctuate.

  • Which is better, ACH or wire transfer?

Not everyone has a choice of which to use when sending money electronically. However, if you do and you need to send money quickly, a wire transfer will usually be processed faster. If processing time isn’t a factor, ACH transactions are usually less expensive.

  • Which is better for sending money internationally, ACH or wire transfer?

You can send money internationally by either an ACH transfer or wire transfer. Therefore, it depends on your other needs. If you don’t need to send the money quickly, an ACH transfer is typically a better option due to its lower costs and built-in protections against fraud.