ACH Payments vs. Wire Transfers vs. EFT Payments

You may have heard the terms ACH, wire transfer and EFT, but are still unsure what they mean exactly, and how they differ from each other. In terms of straightforward definitions, you have the ACH which stands for Automatic Clearing House, and EFT which stands for Electronic Funds Transfer. To start off, we’re going to take a look at the difference between an ACH payment and a wire transfer.

ACH vs. Wire Transfers

ACH is comprised of a network of banks that batches transactions between its members. An ACH transfer is also known as a direct deposit, and it is most prominently used in automatic, recurring payments, such as wages, bills, and subscriptions. An ACH transfer might take anywhere from a few hours to a few days to complete, and it is generally less expensive and slower than a wire transfer. It is also a payment system that is exclusive to the US.

A wire transfer is a payment method in which one account transfers funds directly to another. It is an international payment method, and funds land almost instantly into the account of the payee. The drawback of the wire transfer is the high transaction cost. When making or receiving a high volume of payments, the fees can be quite drastic, with some banks even charging what amounts to double digit fees. When making an international transfer, the fees are even greater. It is also much more difficult to undo an erroneous transaction once it is made.

Given these pros and cons, each business or individual decides whether ACH or wire transfers are best suited for the situation at hand. Do you have a large batch of payments that have to be made? You go with the ACH. Do you have to make an immediate, international payment? Wire transfer is the best option. However, in terms of trends, we see ACH growing in popularity, because of the low costs and low risk associated with this payment method.


An ACH transfer is sometimes referred to as an EFT transfer, because EFT is a term that covers several different types of financial transactions. In other words, the only difference between an EFT and an ACH transfer is the degree of specificity. EFT includes ACH under its umbrella, and ACH is always an EFT. EFT also includes transfer methods such as eChecks, ATM transactions and some POS transactions.

Using ACH

In order to be able to use the ACH system, you will need an account, such as a merchant account, which may also come with other perks such as credit card processing. With ACH, you will be able to pay your vendors and employees, and set up subscriptions for your customers. And, if you have any international payments to make or receive, you can use wire transfers to great effect. In general though, you may find that the ACH is system is a preferred option, especially for B2B vendors.

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