Know the main differences between ACH and wire transfer

When you need to send or receive money, electronic transfers are often a good option. Funds move safely, nothing is lost in the mail, and the bank maintains a record of transactions that make it easy to keep track of what happened.

You can transfer money electronically in a number of different ways. Two of the most popular and well-established options are ACH transfers and wire transfers, but these methods can sometimes get confusing. It's helpful to understand the pros and cons of each option so that you choose the right option the next time you need to move money.




Transfer Speed

A wire transfer moves funds from one bank to another within one business day, and the money can even be available for spending on the same day.

However, sometimes the funds are not visible in the recipient's account, or you don't have access to the funds as soon as you receive the wire transfer. Although the process is mostly automated, sometimes bank employees need to review wire transfers and deposit funds in the destination account. The best of all things considered:

If time is of the essence, ask for a wire transfer in the morning so there is plenty of time to complete the process. International cables can take an extra day or two.

ACH transfers usually take one business day to complete. Banks and clearing houses process ACH payments in groups - all done together instead of handled individually. However, the ACH system is moving towards same-day transfers, and multiple payments are already eligible for same-day treatment. You'll see more and more payments being made faster as your organization adapts to the new rules.

Assurance and Security
Wire transfers are similar to electronic cashier's checks:

When receiving funds, the bank treats the payment as net cash and allows the recipient to spend or withdraw as soon as the payment is credited to the final account.

When sending money, funds must be available in the sender's account before the bank sends funds. The bank will immediately remove money from the sender's account when processing the request.
The risk of fraud is always high when you send money, but your risk is relatively low when you receive funds.

If you receive a genuine wire transfer, you can be sure that the sender has the funds available and their bank is sending the money. Wire transfers are a relatively safe way to get paid, and unlike cashier's checks, wire transfers are not faked frequently.

Make sure you are receiving an actual wire transfer, not some other type of electronic payment. Venmo and other services are not bank transfers, although people sometimes use the term "wire transfer".

If you are sending money by wire, you need to be absolutely sure that you know who you are sending the funds to. Wire transfers are generally irreversible, and recipients can withdraw funds immediately.

Costs for Sending and Receiving

Wire transfers: Banks and credit unions typically charge between $ 10 and $ 35 for wire transfers within the United States, and international transfers are more expensive. There is almost always a fee to send a wire transfer. Receiving wire transfers is often free, but some banks and credit unions charge a small fee for receiving funds over the wire.

If you fund transfers with your credit card, you will pay more due to higher interest rates and cash withdrawal fees.

ACH transfers are almost always free for consumers - especially if you receive funds in your account. Sending money to friends and family using P2P payment apps or services is usually free or around $ 1 per payment (these services often use the ACH network to fund payments). Businesses and other organizations that pay wages or receive bill payments by ACH typically pay for the service. Transaction fees are usually less than $ 1 per payment. 10

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