ACH vs Wire Transfer: What is the difference?
ACH and wire transfers are the two most common types of sending money digitally from one bank account to another. In this article, we’ll cover their differences and which is better, as well as convenient online options like Xe and Wise where you can use ACH or wire transfer as a payment method, even if you’re sending overseas. Let’s dive right in.
Key Takeaways
- Both ACH and wires can be used to move money from one account to another electronically
- ACH is most commonly offered in the US only. Wires can be sent internationally. Or use a provider like Wise or Xe Money Transfer to pay for an overseas transfer with ACH (more on that later)
- Domestic wires can be received within the same day they’re sent – ACH payments may take a day or two depending on how they’re processed
- Wire payments usually have far higher fees compared to ACH – especially when sending money overseas. Check out specialist services like Wise to see if you can beat international wire transfer charges and save money
What is an ACH transfer?
ACH stands for automated clearing house. ACH payments – which are also known as direct deposit, direct payments, electronic check and bill pay, among other things – are one of the most popular and common ways to transfer funds electronically between US bank accounts.
ACH payments are convenient, and usually either free or very cheap for individuals to use. ACH payments can be arranged to arrive on the same day, next day, or 2 days after sending, and they’re often used for paying bills, receiving salaries and more.
What is a wire transfer?
Wire transfers are another popular way of sending a payment electronically from one bank account to another. Most banks offer wire payments in the US and internationally, which you can arrange in person in a branch, or through your online banking system.
Wire transfer fees can be higher compared to sending an ACH payment – but domestic wire payments will usually arrive very quickly, making this popular when speed is the most important factor, or when sending a higher value transfer.
Which is better for international transfers: ACH or Wire?
While it’s possible to send an international ACH, in practice not many banks offer this service. Instead, your bank is likely to suggest you send an international wire – which can mean higher fees.
Here’s a quick look at how international ACH and international wires match up on some important features:
| Feature | International ACH | Wire transfer |
|---|---|---|
| Availability | May not be offered by all banks | Very commonly offered by banks |
| Processing | Processed in batches, which may mean a small delay | Processed as soon as initiated, as long as you meet cut-off times |
| Fees | Usually free or cheap for the sender | Costs can be high, and include several different fees |
| Best for | Commonly used when cost is the most important consideration | Commonly used when speed is the most important consideration |
Traditional banks may not let you pay for your international payment using ACH. That can mean a higher fee and longer delivery time as you’ll need to use a wire instead.
One smart alternative is to look at specialist providers like Wise and XE Money Transfer, which let you pay for an international transfer using an ACH in dollars, to be deposited into your recipient’s account in the currency you need. That could mean you get the best of both worlds, with low fees to pay using ACH, and pretty fast delivery times, too.
Main Differences between ACH and Wire Transfers
Both ACH and wire transfers can be hendy, depending on where you’re sending money to, how fast you need it to arrive, and your personal preferences. Let’s unpack a few of the key differences between ACH and wire payments.
ACH vs Wire: Transfer Speed
How quickly your money will arrive can be crucial, especially when you’re sending money overseas. Let’s look at the transfer speeds for both ACH and wires.
ACH transfer time: Domestic ACH payments can be set to delivery on the same day, next day or in 2 days after the payment is initiated. Few banks offer international ACH – if yours does you’ll need to confirm delivery time directly as this can vary somewhat
Wire transfer time: Domestic wires usually arrive within hours, international wires can take 3 – 5 days
ACH vs Wire: Transfer Fees
The exact costs you pay to send money from one bank account to another can vary a lot based on the payment value, destination, and your own bank’s policy. Here’s a breakdown of ACH vs wire fees:
ACH transfer costs: Often free for the person sending – if there’s a charge it’ll usually be fairly small
Wire transfer costs: Wire fees can be higher. Domestic wires can cost around 20 USD. Foreign currency wires may look like they’re free – or have low fees – to arrange online, but the actual costs will be rolled up in the exchange rate used to switch from dollars to the currency you need. Overall, the price for an international wire can be pretty high
ACH vs Wire: Transfer Safety
The good news is that both ACH and wire payments are safe compared to the alternatives, such as mailing cash or a check. While fraud does impact both ACH and wire payments this usually involves a scammer tricking a vulnerable individual into voluntarily sending them money, rather than as a fault of either payment system itself.
That said, there are differences in the way ACH and wires provide security for customers. Here’s what you need to know:
ACH transfer safety: ACH payments are overseen by NACHA, an organization tasked with ensuring the system is robust and properly used. NACHA has a reversal framework which allows banks to reverse an ACH payment if it was sent in error, although specific eligibility criteria applies
Wire transfer safety: Wire payments are usually initiated immediately once the customer requests them. Once the money has been sent it can be hard to get back, and reversals are not usually possible. Check the recipient details carefully before you hit send
ACH vs Wire: Transfer Limits
Individual banks and financial service providers set their own limits for the amount you can send by ACH or wire. Here’s how ACH vs wire transfer limits usually shape up among traditional US banks.
ACH transfer limits: It’s common to find lower limits on ACH payments, including caps on the amount that can be sent per transaction, per day and per month
Wire transfer limits: It’s often possible to send an unlimited amount by visiting a branch – but online wires can have fairly low caps
ACH vs Wire: Transfer Process
You can often manage both ACH and wire transfers online, but some banks do ask you to visit a branch to get started. Once you hit send on a wire it’ll start to process immediately as long as you hit the bank’s cut off times. ACH payments may wait a while as these are processed at fixed intervals throughout the day, in batches.
How to make an ACH transfer: You can often make an ACH transfer online or in your bank’s mobile app, simply by navigating to the payment ares
How to make a Wire transfer: Many banks let you send lower value payments online and using your phone – but you may need to visit a bank branch to make a higher value transfer
Alternative Ways To Send Money Online
Sending money with your bank isn’t your only option. Alternative online and mobile providers can also help, and may even offer a more flexible service with lower overall costs.
Here we’ve looked at 3 popular options to send money internationally online or through a mobile app – XE Money Transfer, Wise and Remitly. Each has its own features and fees which may make it more suited to one customer or another. Here’s what you need to know.
| Feature | Xe Money Transfer | Wise | Remitly |
|---|---|---|---|
| Send money to | 130+ countries | 70+countries | 145+ countries |
| Pay out options | Deposit to bank accounts, or send for cash collection | Deposit to bank accounts | Deposit to bank and mobile money accounts, or send for cash collection |
| Fees | Variable fees based on destination | From 0.41% | Variable fees – pick cheaper Economy payments, or faster Express payments |
| Exchange rates | Exchange rates include a markup | Google exchange rate, with no markup | Exchange rates include a markup |
| Pay in options | ACH, wire, credit or debit card | ACH, wire, credit or debit card | Bank account or card |
| Speed | 1 – 4 days depending on destination | 50%+ of payments arrive instantly, 90% are there in 24 hours | Bank account payments – 3 to 5 days Card payments arrive in minutes |
| Safety | Regulated to trade in the US and globally
| Regulated by multiple bodies around the world and safe to use | Registered as a money service business in the US, and holds state licenses in several states |
| Best for | Great global cover and a broad range of currency options | Low cost international transfers which use the Google exchange rate | Sending money quickly for cash collection – even on the other side of the world |
Online specialist services can offer fast payments – often to a broad range of countries. You might find different features compared to your bank – such as cash collection transfers, and some providers, like Wise, use the mid-market exchange rate, with no markup or margin.
Compare some alternative providers before you get started, to see if you can get a faster, cheaper and more intuitive service.
Here’s a summary of the providers we looked at as alternatives:
- XE review: Great global coverage, send to bank accounts or for cash collection, depending on your preference
- Wise Review: Fast payments to bank accounts, with the mid-market exchange rate and low transfer fees from 0.41%
- Remitly Review: Pay with a credit card to have money deposited or collected in minutes – or save on the costs and pay with your bank account for a more economical option with longer delivery times
Conclusion: What is the difference between ACH and Wire Transfers?
ACH payments are frequently used for USD payments – from covering your utilities bill, to getting your salary through direct deposit. Fees are cheap – or even free – and the service is reliable and easy to use. However, ACH payments aren’t usually available internationally through normal banks – which can be a drawback if you’re sending money abroad.
Wire transfers are normally offered both at home and abroad, with most banks having some online payment options. However, fees might be high, and you might have to visit a branch to send your transfer – which is a hassle and can mean higher fees too.
If you want to send a payment to be deposited into a bank account – and want to get the mid-market exchange rate with low fees and a super quick delivery – check out Wise. Or, if you’re sending a very exotic currency, or if you want your money to be collected in cash at the other end, you can try Xe Money Transfer. Both services are easy to use, right from your laptop or smart device.
FAQs on Wire Transfers vs ACH
Let’s look at a few common questions about wires and ACH payments, and how they differ.
What is the difference between ACH and wire transfer?
An ACH is used to send a low cost payment, usually in the US. Wires on the other hand have higher fees, but can be sent securely all over the world by your bank.
Related: How to transfer money to someone else’s bank account
Is ACH the same as wire transfer?
ACH and wire transfers are both used to send payments electronically from one bank account to another. However, the services are processed in different ways and have different fees, too. ACH is more common for USD payments, while wires can be sent all over the world.
Which is faster ACH or wire transfer?
Domestic wire transfers can be faster than ACH payments. However, for international transfers, wires can take a few days. If you’re sending money overseas, using a specialist like Xe Money Transfer or Wise may mean a faster delivery.
Which is cheaper: ACH or wire transfer?
The exact fees you pay will depend on your own bank, but it’s common for ACH payments to have low fees – or even be free for the sender. Wires usually have charges, which can be particularly high when sending payments abroad.
Is ACH routing and wire routing the same?
ACH and wire payments use different processing systems. ACH transfers go through the automated clearing house, while wires usually use SWIFT. Both of these are back of house payment networks which banks use to make sure your money arrives safely in its destination.
