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ACH vs Wire vs Electronic Transfer? What is the difference?

We now live in the 21st century and long ago were the days of writing checks! With the advent of more efficient forms of payment, fewer checks were written. We still use checks for personal services, piano lessons, and sending money for graduations, birthdays, etc. 

While most businesses use checks for their payment operations. However, paper checks are still highly valued and will not be completely erased, but personal check writing continues to decline.

Electronic payments are the hope of today's world. The act of paying for goods and services is constantly changing before our eyes. In 2018, ninety-six percent of Americans were paid electronically by direct deposit. 1 Loan payments are paid automatically with a one-time setup request. 

The tax refund process is safer with faster turnaround. Father sent money to his daughter for the second time during spring break. We even bought shoes with the online app while waiting in line for our mochas, BOTH paid for with our smart phones!

But how is all this processed without writing a check?

The most widely used form of remittance today is Electronic Fund Transfer (EFT). This is a general term for transferring money, not by check. Conducted electronically and utilizing computer networks to transfer funds from one member / institution to another as a form of payment. This includes all types of transfers: credit and debit cards, employee salary deposits, online bill payments, online banking, wire transfers, and ACH processing.

There are several ways to send or send money… but what's the difference? There are three main electronic methods of transferring money: ACH transfers, wire transfers, and electronic transfers via third party systems. People also ask about digital wallets and bitcoin, it can also be categorized as electronic money (eMoney).

Electronic Funds Transfer (EFT)

In the simplest terms, EFT is any transfer of funds from one account to another that occurs electronically. EFT includes ACH and Bank Transfer services. ACH transfers are sometimes referred to as EFT transfers, because EFT is a term that covers several types of financial transactions. In other words, the only difference between EFT and ACH transfers is the level of specificity. Electronic Transfer includes ACH under its umbrella, and ACH is always EFT. EFT also includes transfer methods such as eCheck, ATM transactions, and some point of sale (POS) transactions.

ACH transfer

The most popular method of transferring money is via ACH. ACH stands for Automated Clearing House, which is an electronic network used by financial institutions to process transactions in batches. Usually ACH transfers take several days to process and to clear the recipient's financial institution. This is because it requires arrangement and confirmation by the recipient.

Examples of ACH transfers include payroll direct deposit, automatic loan payment withdrawal, online bill payment, Social Security benefit distribution, and person-to-person payments. Since most ACH transfers are automated, they are quite cheap for credit unions and members. ACH payments can be set up as one-time or recurring transactions. In addition, same-day ACH processing has emerged to accommodate faster payments.

ACH payment processing works where the originators (usually banks, credit unions, companies, or other business entities) transact direct deposit or direct payment transactions using the National Automated Clearing House Association (NACHA). NACHA manages the development, administration, and governance of the ACH Network. For example, the IAACU originates from the transfer of ACH loan payments.

What are the risks? ACH is a safe wa

y to transfer money from one account to another only after verification of user details at the other end. Guaranteed by every individual because it avoids the risk of information leakage. It connects various financial institutions or banks.

Real Time Transfer RTP® Payments

Similar to ACH payment processing, a new payment network emerged in 2017 and was built to support real-time payments in the US for "credit" only. Real-Time Payments RTP® owned and operated by The Clearing House® This has been the first major upgrade in electronic payments since the Automated Clearing House (ACH) was created 40 years ago and Check 21 was launched in 2001.The network provides Real-Payment processing. futures for depository agencies. Real-Time Payments is becoming the new norm among businesses and consumers alike. Real-time payments take seconds for payments to be sent and received regardless of the day or time.

While this network is convenient for businesses and consumers, not all businesses or financial institutions will abandon or have the option of leaving their old processing systems. Changes of this size take time and money to change processing operations. However, as changes are made and time passes - the system will too, and real-time processing will likely become the standard.

Third party payment processor (TPPP)

As part of the ACH processor, there are also countless intermediate TPPP that have entered the field in recent years. They provide payment processing services to merchants or business clients and group these payments together to take advantage of economies of scale. Below is a simple example of a merchant using TPPP to collect payments / receipts for goods that have been purchased by their customers. TPPP usually offers debit and credit payment processing. On the payment side, financial institutions often use 'Bill Pay' payment providers as their TPPP to facilitate customer payments and transactions. TPPP process via ACH and RTP®.

There are also EFT transactions made from ACH check conversions. Businesses of all sizes convert paper checks to ACH debits to reduce processing costs and improve their operational efficiency. When a customer writes a check that is converted into an electronic payment processed via the ACH network, information such as the customer's bank routing number, the customer's account number, and the check serial number is captured. Transactions are then processed via the ACH Network and a one-time debit is made to the customer's account. 

The customer payment experience doesn't change, only the way payments are processed and most importantly, the speed of transactions. This ACH check conversion process is known as a point of sale conversion (POS).

Other portals for sending money electronically include e-commerce entities such as PayPal, Dwolla, Amazon Pay, and many other alternatives. This company allows users to send and receive money, possibly without the fees associated with ACH and wire transfers. However, consumers should not use it because of the time and effort it takes to set up an account. PayPal, the most common system, does not charge a fee when a customer sends money to another PayPal user via the linked banking system. This system arises when sellers and buyers are concerned about fraudulent activity, providing a safer option than many alternatives. 

Wire Transfer

In contrast to the processing nature of ACH batch transfers, wire transfers are designed for individual transactions. The biggest benefit of wire transfers is the speed or availability of funds. You can send money to someone across the country or around the world, usually on the same day. Wire transfers involve more interaction between sending agencies and receiving agencies. At the IAA Credit Union, if a funds transfer request is received before 2:00 p.m., the funds will be sent the same day and usually confirmed by the receiving agency. Due to the availability of funds and transaction speed, wire transfer fees are usually more expensive than ACH transfers, incoming transfer fees may also be charged by the receiving agency.


While the CASH $$ will not disappear from counter service any time soon, many restaurants make it easy to pay with our watches and / or phones. Crazy, right ?! Digital Wallets (also sometimes called e-wallets) change how you pay for goods. Electronic money (e-money) is broadly defined as an electronic store of monetary value on a technical device that can be used to make payments. Many digital wallet services work through an application on your smartphone. 

When buying coffee, for example, you can simply tap your phone against a compatible cash register to pay instantly. E-Wallet allows you to store multiple credit card and bank account numbers in a secure environment and eliminates the need to enter account information when making payments. After you register and create an E-Wallet profile,

Venmo provides a digital wallet service that allows you to make and share payments with friends. 3 You can split the bill, taxi fare, etc., the money will be transferred from the venmo balance, the associated debit or credit card, or the linked bank account.

What are the risks? In fact, EFT is the fastest form of transfer using electronic gadgets. But there is a risk of hacking the credit card information or account details of people who are customers of the financial institution. But it is an instant process when compared to ACH. But today, people prefer transfers that are faster, cashless, and paperless.

In the case of Bitcoin

Bitcoin is a digital currency that represents electronic money (e-money). Digital currency denominated in its own unit of value is considered virtual currency, and is designed to function in peer-to-peer transactions as currency. Using bitcoin in the United States is legal, and payment is subject to the same taxes and reporting requirements as any other currency. However, there is no physical bitcoin currency like the dollar.

pros and cons

In short, all forms of EFT are acceptable. If you are concerned about security, electronic transfers are a safe payment method. You only need to expose your bank account information once, when you sign up for electronic payments. Please note, check writing is not immune from fraud. There are rules and regulations to keep you covered with both options.

Depending on the price and availability of funds, the cheapest option to send money is an ACH transfer, especially if the payments are recurring. Wire transfers are better if the transaction is urgent, and the TPPP service will be wiser if you and the recipient have user accounts. However, the next time you're at a retail outlet, don't be afraid of a new way of processing your payments - just make sure you have the funds available to cover your purchases!