A Guide to EFT vs ACH Payments

The electronic payment industry has given rise to many different ecommerce credit card payment systems that businesses can offer their customers to make purchases. Users can take advantage of these systems if they know the benefits and drawbacks of each.

In 2020, fewer people than ever before will pay for goods and services with checks or cash. Automated Clearing House (ACH) and Electronic Funds Transfer (EFT) payments are two of the available options in the vast ecommerce credit card payment system that has arisen as electronic payment technology has developed. When comparing EFT vs ACH it helps to know what they are and what they’re good for.

Whether you’re a business trying to decide what ecommerce credit card payment system to offer your customers or a customer looking for their ideal payment method, this article hopes to be your guide to both of them.

ACH payments

Concerning the question of EFT vs ACH, it’s a little confusing since EFT is a blanket term that technically includes ACH. For this article, ACH means the specific electronic transfer of the Automated Clearing House Network and EFT means other electronic transfers that don’t go through that system. Just realize that all transactions made on an ecommerce credit card payment system are technically EFT.

ACH payments specifically are direct deposits or payments made to a receiver such as through a paycheck or a tax refund. They can take a comparatively long time to process as they often come from an organization or institution and there is no automatic approval or denial function as there is with other credit card purchases.

If you pay a utility bill directly from your checking account online, you’re probably making an ACH payment. The lack of authorization or denial makes them different than a credit card transaction since an ecommerce credit card payment system will issue credit whereas an ACH payment directly withdraws funds.

The reason to use ACH payments in your business is that it’s a flexible payment option for consumers and offers much lower transaction fees to you. They just can take a longer time to process compared to other ecommerce credit card payment systems.

EFT payments

Electronic transfers that are not ACH payments are EFT transactions. These occur when making payments or when money is transferred between banks.

The question of EFT vs ACH is tricky since all credit card, mobile, and online payments are EFTs, including PIN transactions at the gas station or ATM.

Like ACH, EFT is faster and cheaper than checks and more convenient for everyone. The reason to use a generic EFT and not the ACH system is that it’s even faster. However, this comes with less security since it doesn’t go through the ACH’s vetting system before funds are approved.


The Takeaway

The question of EFT vs ACH is built on the premise that you might prioritize speed or safety when choosing your ecommerce credit card payment system. While ACH payments are technically EFTs, EFTs, in general, are faster while ACH is more specific and takes longer to process but has added security.

Use this guide and further research the differences to know what you should offer your clients.

For more information on EFT vs ACH payments, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.

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