Chances are, you’ve used an ACH transfer or wire transfer at some point. They’re both ways to send money electronically, but they’re used for different purposes. Learn the answers to your frequently asked questions about these two payment methods.
ACH Transfers
- What is an ACH transfer? ACH, or Automated Clearing House, is a network that moves payments between financial institutions. You’ve probably used an ACH transfer before – direct deposit, automatic bill pay, and payment apps all use this network
- How fast do ACH transfers process? ACH transfers usually process within 3 business days. You can also pay a small fee for same-day transactions.
- Where can I send an ACH transfer? ACH is usually only used domestically, in the United States. Only a few international institutions have ACH capability, so most people opt for wire transfers for international payments.
- What are ACH transfers used for?ACH is best for routine payments, since they can be automated. It’s also a good option for payments with flexible deadlines, since they take a few days to process. You can initiate a debit or a credit – meaning you can pull money from another account, or send money to another account.
- How much do ACH transfers cost?ACH transfers have no fee for the sender and receiver, unless you are using same-day ACH.
Wire Transfers
- What is a Wire Transfer? A wire transfer is a quick way to send money electronically. Instead of using the Automated Clearing House network, wires operate using the SWIFT system or FedWire. They’re a popular option for international payments, but they’ll cost you more than an ACH transfer.
- How fast do wire transfers process? Wire transfers usually process within one business day.
- Where can I send a wire transfer? You can send a wire transfer both domestically or internationally. Your financial institution may require you to come in-person to a branch to send a personal wire transfer.
- What are wire transfers used for? Wire transfers are a good option for urgent transactions, since they process quickly. They’re also a common option for large, one-time payments, since they cannot be automated for repeat payments. You are only able to send money to the receiver, and cannot initiate debits.
- How much do wire transfers cost? Wire transfers charge fees for both the sender and receiver. The amount varies on where you are sending it to. Fees on international transfers can be around $50. Additionally, you’ll have to take into account the exchange rate in the country you’re sending to.
Key Differences
ACH transfers are the best option for recurring or domestic payments, while wire transfers are best for one-time or international payments. They also differ in cost – ACH transfers are typically free, while wire transfers will cost you a significant fee.
If you ever have to make an electronic payment, consider what method is best for your situation. It’s important to understand the differences between the two so you can make the best decision.
