Key Differences Between ACH and Wire Transfers

Electronic Money
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When you need to send money, an electronic transfer is often a good way to do so. The funds move safely to the recipient, and banks keep transaction records that make it easy to track what happened.

There are several ways to move money electronically. Two of the most popular and well-established options include ACH transfers and wire transfers, but these methods sometimes get confused. It’s helpful to understand the pros and cons of each option so you choose the right one the next time you need to send or receive funds.

Transfer Speed

Wire transfers move funds from one bank to another in one business day, and the money can even be made available that same day.

That said, sometimes you won’t see the funds or have access to funds immediately when you receive a wire transfer. Although computers do much of the work, the process is not 100 percent automated. A bank employee typically needs to review wire transfers and get the funds into the recipient’s account. If time is of the essence, request wire transfers first thing in the morning. International wires can take an extra day or two.

ACH transfers often take two to three business days to complete. Banks and clearinghouses process ACH payments in batches—they’re all done together instead of being handled individually, first-come-first-served. However, the ACH system is moving toward same-day transfers, and some payments are already eligible for same-day treatment.

Increasingly, you’ll see payments completed more quickly as organizations adapt to the new system.

Certainty and Safety

Wire transfers are similar to an electronic cashier’s check:

  • When receiving funds, the bank treats the payment as cleared money and allows the recipient to spend or withdraw as soon as the payment is credited to the final account.
  • When sending money, the funds must be available in the sender’s account before the payment is issued. The bank will immediately remove the money from the sender’s account as the request is processed.

Scam risks are high when you’re sending money, but relatively low when you receive funds.

  • If you receive a genuine wire transfer, you can be confident that the sender had funds available and their bank sent the money. Wire transfers are a relatively safe way to get paid, and unlike cashier’s checks, they aren’t often faked. Just make sure you receive a real wire transfer, as opposed to another type of electronic payment.
  • If you send money by wire, you need to be completely certain that you know who you’re sending the funds to. A wire transfer generally cannot be reversed, and the recipient can withdraw the funds immediately.

ACH transfers are also quite safe, but ACH transfers into your account can be reversed. This is true of mistakes that your employer makes (if they overpay by accident) as well as fraudulent transfers out of your account. However, there are rules about when and how banks authorize reversals, so most transfers are going to stay unless there was clearly fraud or a mistake.

With either type of transfer, you may need to provide information about your bank account, including your account number, bank routing number, and name. Those details can be used to steal funds from your account, so only provide that information if you trust the recipient.

Cost to Send and Receive

Wire transfers: There is almost always a fee to send a wire transfer. Banks might charge between $10 to $35 to send a wire within the United States, and international transfers cost more. Receiving a wire transfer is often free, but some banks and credit unions charge small fees to receive funds by wire. If you fund the transfer with your credit card, you'll pay much more due to higher interest rates and cash advance fees.

ACH transfers are almost always free for consumers—especially if you’re receiving funds in your account.

Sending money to friends and family using apps or P2P payment services is usually free or around one dollar (those services often use the ACH network to fund payments). Businesses and other organizations that pay wages or accept bill payments by ACH typically pay for that service. Transaction charges are usually less than $1 per payment.

The Process

Depending on your bank, there’s a decent chance that you can set up both wire transfers and ACH payments online.

However, some institutions require additional steps for wire transfers—especially when sending out large transfers. Your bank might require verification of wire transfers by phone, and you might even have to use paper-based or electronic forms to complete your request.

To send a wire transfer, provide information about your account and the account you want to send funds to. The required information includes bank names, account numbers, ABA routing numbers, and so on (see where to find this information on a check).

To send an ACH transfer, you usually use a form provided by the organization you’re paying or the service you’re using. Most consumers cannot create ACH payments to third parties from personal bank accounts, but businesses may have several options available. When using P2P services, you might just need to provide the recipient’s mobile phone number or email address, and the recipient will provide their bank account information separately.

Common Uses

Because of the differences described above, wire transfers and ACH transfers solve different needs.

Wire transfers are best when speed and certainty are crucial. Otherwise, why pay the fee and take the extra steps to complete a wire? A typical example is a down payment for a home purchase. Sellers won’t release the title unless they’re confident you can pay, so guaranteed checks and wire transfers are useful.

ACH payments are good for small, frequent, non-mission-critical payments. As long as everybody involved trusts each other (more or less), it’s cost-effective to use this automated system. Common examples of ACH payments include: