ACH vs. Wire Transfer: Which One Is Better for You?

ACH transfer vs wire transfer: Quick summary

Looking for a quick answer? Here’s a top-down look at these two transfer types:

• ACH transfers are a fair bit slower but also cheaper

• Wire transfers are faster but more expensive

• It’s easier to reverse an ACH than a wire transfer

• It’s easier to send money internationally with a wire transfer

• It’s easier to set up recurring payments with ACH

• Wire transfers are better for moving large sums of money

Here’s an in-depth exploration of both methods.

What's an ACH transfer?

ACH stands for automated clearing house, an interbank network used to process financial transfers. The ACH network is used for batch transfers, meaning banks lump together multiple transactions and send them all through at once.

You might already have used an ACH payment without even knowing it. The ACH network is used for many purposes, including the following:

• Direct deposit paychecks

• Government benefits

• Expenses reimbursed by your employer

• Tax refunds

• Interest and annuity payments

• Bill payments online with your bank account

• Social payment apps like Venmo (these apps use the ACH network to transfer your funds)

Most ACH transfers happen domestically, although more banks now offer international ACH services. If you’re sending an ACH transfer, you’ll need to provide your recipient’s name, bank routing number, account number, and the total amount you want to transfer.

ACH transfers offer many benefits. For instance:

• They’re typically free or very inexpensive

• They minimize the risk of fraud

• They save time (e.g., you can pay bills online without writing a check or visiting a bank branch)

• They let you set up automatic payments

However, there are also a few downsides to consider, such as:

• They typically aren’t sent on the same day

• Most banks limit the frequency of transfers, the amount you can send, or both

• You can’t always use them to send money internationally

• You need to share your account information to send one

For many people, the biggest downside of ACH transfers is the time it takes for funds to post to an account. Transfers usually take around one to three days. If you’ve ever kept an eye on your bank account waiting for your paycheck to appear, you understand that this can feel like a very long time.

What's a wire transfer?

If you need to send money quickly and/or internationally, wire transfers are probably your best option. These transfers take place between financial institutions.

If you were to send a wire transfer, you’d pay your bank up front and give them your recipient’s information. From there, your bank would message your recipient’s financial institution through a secure system like Fedwire or SWIFT (Society for Worldwide Interbank Financial Telecommunications).

Once your recipient’s bank got the message, it would deposit the correct amount, using its own reserve funds to make the money available quickly. Your bank would then send the recipient’s bank the payment later.

Unlike ACH transfers, you can make wire transfers without a bank account. To do so, you’d need to visit a non-bank wire transfer company in person and pay with cash.

There are several scenarios where you might choose to use a wire transfer. For example:

• You need to send someone money urgently

• You need to send money overseas (wire transfers don’t have the same cross-border issues as ACH)

• You’re making a large personal purchase (like a down payment on a home) and need the funds to go through immediately

Wire transfers have several advantages, including:

• They can’t bounce due to insufficient funds

• They’re faster, even when sending money internationally

• They’re generally safe and secure

• You don’t have to have a bank account to make one

That said, they still have their downsides:

• They tend to be expensive; domestic transfers are usually $15–$30, and international transfers range from $35 to $50

• It’s difficult to reverse a wire transfer once you send it

• Most banks limit the amount you can send per day and per transaction

• The Office of Foreign Assets Control monitors wire transfers and freezes any suspicious ones, so it’s possible that your transfer could be flagged in error

The cost of a wire transfer is its biggest downside for most people — you’re effectively charged a premium for speed (like when you pay for rushed or overnight shipping). However, if you need to send money as fast as possible, you might decide that the fee is worth it.

ACH vs wire transfer: The difference

Now that you have a better idea of how ACH and wire transfers work, let’s look at how the two stack up across different parameters.

Transfer speed

As you now know, wire transfers tend to be faster than ACH transfers. But how much faster, exactly?

ACH transfers are sent in batches, which are processed only seven times a day. Furthermore, this only happens when banks are open, so if you send one on a weekend or holiday, you might have a longer wait. Some transfers appear in one to two days, but others may take several business days to appear.

The larger the transfer, the longer it’s likely to take. That’s because banks often must verify that sizable transfers are legitimate.

If you’re in a hurry, you might be able to speed up the transfer. Some banks offer the option to pay a fee to expedite your transfer. Usually, this means it will be sent through on the next business day.

On the other hand, wire transfers within the United States are generally processed within 24 hours. Some banks allow the recipient to instantly access the funds. International wire transfers are usually completed in a few days.

If you and your recipient have bank accounts with the same institution, your transfer will likely go through quickly. In some cases, your recipient may see the funds posted to their account immediately.

Settlement and recalling

ACH transfers are much easier to reverse than international wire transfers. That said, if you want to reverse an ACH transfer, it must be for a reason approved by Nacha, the organization that oversees ACH. Acceptable reasons include:

• Incorrect amount transferred

• Money sent to the wrong recipient

• Duplicate payment

• Payment date earlier/later than intended

By contrast, if you make a mistake with a wire transfer, it may be difficult or impossible to recover the funds — you can't reverse a transfer once the recipient’s bank accepts the money. However, it might be possible to stop it if you file a cancellation notice with your bank in time.

You’re more likely to be able to reverse an international wire transfer than a domestic one. Do your best to verify all information before you send a money transfer.

Cost

For many people, cost will be the biggest factor when deciding whether to use ACH or wire transfer. ACH is cheaper (sometimes free), while wire transfers are more expensive.

Here’s an estimate of how much it would cost to send $1,000 domestically and internationally with each method:

In many cases, the amount you send will impact the rate, with larger transfers costing more. However, some banks charge a flat rate, regardless of the amount sent.

Ability to send internationally

Wire transfers are usually the easiest way to send money internationally. Most countries can accept wire transfers, but only certain countries and banks will accept international ACH transfers.

Frequency

In almost every case, it’s easier to set up recurring ACH transfers than wire transfers. Wire transfers are generally one-off transactions, though some banks may allow you to set up recurring wire transfers.

If you’re interested in setting up a recurring wire transfer, it’s worth talking to your bank. Just remember that you’ll likely be charged a transfer fee for each transaction. If you need to set up a recurring payment, ACH is the most cost-effective option.

Size

Different banks can have drastically different upper limits for ACH transfers. For example, Bank of America imposes a limit of $3,500 per day, while JPMorgan Chase’s limit is $25,000 per day.

The upper limits for wire transfers tend to be higher. For example, Fidelity’s wire transfer limit is $100,000 per day. In most cases, a wire transfer is the better option if you need to move a large amount of money.

Safety

Both ACH and wire transfers are more secure than paper checks. However, the ACH network has more security measures in place, so it’s generally the safer of the two.

Convenience

ACH transfers tend to be faster and easier to set up. It’s also easier to arrange recurring transfers (like for paying bills) with ACH. It’s a solid choice if you need a payment method that doesn’t take much time or effort to set up.

However, if your idea of convenience is your recipient getting their funds faster, you’ll have better luck with a wire transfer.

Which option is best?

While neither option is fundamentally better than the other, each may be more or less suitable under different circumstances. Consider the following contexts:

Best for business payments

ACH payments tend to be a bit more secure, and they’re easier to automate through direct deposits. As a result, they’re generally the better option for business payments. A wire transfer might be preferable if your business payment is time-sensitive or must be sent internationally.

Best for personal payments

If you’re sending an international cash gift, a wire transfer will generally work better. But if you’re sending money to a friend within the country, ACH will be cheaper and easier (unless you’re sending a very large amount).

Alternative transfer methods

ACH and wire transfers aren’t your only options. You might consider transmitting funds in one of the following ways:

ACH vs Wire - ACH is cheaper, but wires are quicker

ACH and wire transfers are among the safest, most cost-effective, and reliable money transfer methods available. If you are in the United States, ACH transfers can be convenient for making bill payments or for receiving your social security benefits and wages, whereas if you’re making a one-off purchase it is usually most convenient to use a wire transfer.

However, wire transfers are a much better option for international transfers and moving large sums of money, as ACH transfers tend to be restricted to payments within the USA. In terms of cost, international wire transfers can see you charged up to $65 to have your money moved across borders once all the fees and exchange rate margins are taken into account. However, this cost can be significantly reduced if you shop around and compare your transfer options.

Since most ACH transfers are domestic within the USA, you won’t have to worry much about hidden costs such as exchange rate margins. However, you need to check for less obvious costs like check verification and check guarantee fees, high ticket surcharges, and chargeback fees to make sure you’re getting a good deal on your transfer.

Instead of using international ACH transfers when sending money to other countries, you could opt for online money transfer services. These services can help facilitate wire transfers at low-cost rates, along with giving you a host of other money transfer and business payment options.

To find out the best deal for your money transfer, the best place to go is our simple money transfer comparison tool. By entering the details of the transfer you wish to make, you can compare all your options in seconds and find out if a wire transfer, ACH, or different money transfer method altogether is best for you.

FAQs

Related Content