ACH versus bank wires: What’s the difference & why should we care?

There’s a lot of confusion around these terms. Both are ways to transfer money between bank accounts, but there’s a difference between ACH vs wires when you process the transaction from your bank, especially when it comes to speed and cost.

And remember: there’s a large variety of alternative (and often cheaper) ways to transfer money–check out our comparison site to find the best option.

ACH


ACH (Automated clearing house) is a US clearinghouse (a middleman between banks) which moves money electronically from one bank to another bank. When you transfer money from your bank via an ACH, numerous transfers are grouped together at specific times throughout the day and sent in batches. Examples of the most similar international versions are Europe’s SEPA (the Single Euro Payments Area), or Direct Entry in Australia.

Bank wires

Bank wires (often used interchangeably with the term “wire transfer”) also send money electronically from one bank to another. But there’s no middleman. Each transfer is sent directly as an individual transaction, it’s not batched with other transfers. It’s also a term used mainly in the US–in other parts of the world this is usually called a bank transfer.

Speed & Cost

ACH

ACH transfers from banks are often free or cheaper than bank wires (who doesn’t want to spend less on transaction fees!). But they take longer (roughly two to three days to reach the recipient). The batching system means transfers have to wait for a specific time slot when the money will be moved along with the other transactions.

Bank Wires

Bank wires move money from one bank to another, always require paying a fee (around US $25 to $40 from US accounts) and are pretty fast (generally 24 hours if the transfer is between two US banks, or a few days for international transfers).

It’s like comparing the difference between using a taxi or car service (like Uber or Lyft) to get from from point A to B versus carpooling or using a ride sharing service like uberPOOL, Lyft Line or BlaBlaCar. A taxi will move from point A to B quickly without unnecessary stops, but the trip will cost more. A carpool or ride sharing service waits for a few people to fill up a car and then departs–they’ll all reach their destinations, but the journey is slower and cheaper.

Security

ACH 🛑↩

ACH transfers can be stopped and reversed if there is an error or fraud. The criteria to determine if a payment can be reversed depends on the bank.

Bank Wires 

Bank wires cannot be reversed. Scam risks can be high for the sender but low for the recipient. Senders should make sure they are familiar with the recipient and verify they have the correct details. There’s little risk for beneficiaries–they can be confident that the money they receive is genuinely available.

Typical uses of ACH vs bank wires

ACH 💡

For budget-friendly transfers that are not time-sensitive and/or for transfers that occur on a regular basis, ACH is a popular choice. This type of transfer is commonly used by employers to pay employees or by individuals making automated bill payments to utility companies, like monthly electric or internet bills.

Bank Wires 🏠

If you need to send money quickly for an urgent, important reason, bank wires are common. For example, bank wires are often used to make a down payment to buy an apartment or a house when the money needs to be transferred quickly.

Compare options & save your pennies💰

Sometimes you need to send money pronto, and there’s no way to avoid a fee. But there’s a wide variety options and fees–head to our comparison site to find the best deal.