What Is the Difference Between an ACH Payment And a Wire Transfer?    

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What Is the Difference Between an ACH Payment And a Wire Transfer?    

The automated Clearing House (ACH) payment has proved to be one of the most popular payment methods in the United States, eliminating most of the inconveniences associated with processing physical checks. However, as an online payment processing method, ACH is often confused with a wire transfer.

Many want to know whether an ACH payment is the same as a wire transfer. So, what’s the difference between an ACH payment and a wire transfer? 

What Is an ACH Payment?

An ACH payment is an electronic payment method that uses a computer-based electronic network to process payments. It’s mainly used for low-value domestic payments. ACH payment also supports direct debit and credit transfers.

ACH payments are processed  by the National Automated Clearing House Association (NACHA). It’s also called the ‘ACH network,’ and it has operated in the U.S. since the early 1970s. Many merchants prefer ACH payment processing for small businesses because it’s fast and convenient.

Two main categories of ACH payments are direct payments and direct deposits. Direct deposits cover all deposits from businesses and government institutions to consumers. They include payrolls, government benefits, annuities and interest payments, tax refunds, and employee expense refunds.

On the other hand, direct payments refer to the funds used to make payments by individuals and organizations. In America, the ACH payment network is mainly used to make direct payments.

What Is a Wire Transfer?                  

Also referred to as a bank or credit transfer, a wire transfer sends money electronically from one person or institution to another. It can be between bank accounts or cash offices.

Many banks around the world offer different wire transfer options depending on the immediacy, finality, cost, value, and volume of the transaction. For example, the Federal Reserve Bank in the US offers Fedwire, which provides the quickest wire transfers as it uses real-time gross settlement (RTGS) systems.

Instead of transferring physical cash, wire transfers allow one bank or cash office to share information about the amount of money the sender wishes to transfer to the recipient and the recipient’s details. In addition, the sender’s account is debited for the transaction.

Once the receiving bank or cash office receives the information, it deposits the amount specified into the recipient’s account. Then, the two financial institutions settle the payment on the back end. Wire transfer is one of the easiest and quickest ways to send money overseas.

Difference between ACH Payments and Wire Transfers

Although ACH payments and wire transfers are both electronic payment methods, they transfer funds differently.This difference affects the cost and speed of each method. Here are the main differences between ACH payments and wire transfers:


While both processes can be completed within a day, there’s a difference in the speed with which each transaction is completed. For an ACH payment to post, it goes through an ACH network in rolls, meaning that it may be slowed by the internal review procedures. A wire transfer, on the other hand, is made directly between the two financial institutions, thus speeding up the transaction process.


The internal review processes set up by the ACH network guarantee clients the safety of their funds and provide enough time to cancel transactions in case of trouble. You can even retry an ACH payment.

A wire transfer happens almost instantly, denying you an opportunity to cancel it if there’s a problem with the transaction. Furthermore, a wire transfer can’t be reversed once the funds have been released to the recipient. This can easily lead to loss of money.


Although some ACH transfers charge a small fee, most are free. Speedy ACH transfers are the ones that charge small fees. Wire transfers aren’t free. The fee depends on the financial institution you use and speed.

So, an ACH payment is certainly more secure and reliable than a wire transfer. To enjoy convenient and safe ACH payments, consider using Seamless Chex!

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