ACH means an Automated Clearing House, it’s a movement of funds from one account to another, that’s processed through the clearing house (for example, in the US it’s Federal Reserve or The Clearing House).
There are two types of ACH transfers – deposit and credit.
ACH deposit is a withdrawal from a bank account.
ACH credit is the process of crediting funds to recipient’s bank account.
Read also:
- What is ACH and how does it work?
- Is ACH safe enough? ACH transfers vs check payments, wire transfers and credit cards
A wire transfer is another form of electronic payments, but without a clearing house. In this case, clearing house isn’t involved, so this transaction is immediate, but less secure.
When you’re performing wire transfer, funds are immediately moved from your bank account to the recipient’s bank account.
These two types of transfers may seem to be similar, but there are some key differences you should know.
What are the differences between ACH and wire transfer?
Despite these two payment methods seem to be pretty simple, there are a lot of differences you should know before deciding which method to use. Here they are:
- ACH transfers aren’t immediate, they usually take 1-3 days, while wire transfers are instantaneous.
- The average fee for an ACH transfer is around 0.3%, while for a wire transfer you will usually pay a fixed fee (around $10-$35)
- ACH transfers are processed automatically, while wire transfers are processed by the banks
- ACH payments are more secure, as they’re protected by federal law, as well the clearinghouse rules are stricter than rules for making wire transfers
- ACH transfers can be both credit and debit operations (that means you can both be charged or receive money), while wire transfer can be initiated only by a sender
So, ACH isn’t a wire transfer, as it involves a Clearing House that secures the transfer.
