ACH vs. Wire Transfer: Key Differences

ACH and wire transfer both describe different ways of sending money electronically. ACH is more common, as it’s used for paying bills, receiving paychecks or sending money to someone. They’re also less costly, and are easier to reverse in the event of an error. When sending money internationally or transferring large sums, however, wire transfers are often preferred.

Ask a financial advisor how you can move money quickly and safely without incurring excessive fees.

ACH Basics

ACH, which stands for “Automated Clearing House,” is an electronic network that financial institutions use to move money between their customers’ accounts. Tens of trillions of dollars flow through the ACH network every year, including payroll direct deposits, Social Security benefits, mortgage payments and more.

An ACH payment is a form of electronic funds transfer (EFT). Transfers done via payment apps such as Venmo and PayPal, over the phone, and through automated teller machines (ATMs) are also EFTs. ACH payments have largely come to replace paper checks because they’re faster and easier.

Wire Transfer Basics

A wire transfer, sometimes called a bank wire, is also a kind of electronic fund transfer between banks. Rather than the Automated Clearing House network, banks in the United States usually route wire transfers through the Federal Reserve Wire Network (Fedwire). This network operated by the 12 Federal Reserve branches handles millions of transactions worth tens of trillions of dollars monthly.

To use a wire transfer requires someone to direct his or her bank to instruct the other party’s bank to post a credit to their account in the amount of the transfer. A wire transfer can’t be used to instruct a bank to debit or withdraw funds from an account, as an ACH transfer can.

Key Differences

ACH and wire transfers have different characteristics that make them useful for specific purposes. Major differences include:

How to transfer – A sender can initiate an ACH transfer with no more information than the recipient’s phone number or email address. Sending a wire transfer requires giving the bank more information, including the recipient’s name, address and account number as well as the name, address and routing number for their bank.
Time – Wire transfers are supposed to take no more than two days when the funds are transferring from one U.S. bank to another U.S. bank. In practice, they are usually completed the next day or even the same day. ACH transfers are conducted at the end of each day, rather than in real time, but will still generally be completed within 24 hours and, sometimes, the same day they are initiated.
Cost – Wire transfers are more expensive, with fees for sending a domestic wire ranging from $10 to $30. International wires may cost $75. Banks may also charge the recipient of a wire transfer. ACH transfers, on the other hand, are usually free for consumers sending or receiving, although business users may pay a small fee.
Reversible, or not – Once a wire transfer is funded, it is final and the sender cannot retrieve the funds. If an ACH transfer is sent by mistake, however, it may be reversible. This makes wires inherently riskier than ACH transfers.
International use – Wire transfers are usually used when transferring money to someone in another country. ACH is a U.S. network and, although ACH can be used to sent money internationally using partner networks, international ACH transfers are not available to all countries.
Limits – Banks may limit the amount an account holder can send daily or monthly using ACH. Wire transfers lack similar limitations and are often specified when transferring large amounts for transactions such as real estate closings.

Reasons to Use ACH Over a Wire Transfer

ACH transfers are generally the better option for routine payments and everyday checking accounts. They are widely used for payroll, bill payments, government benefits, and person-to-person transfers. Most banks do not charge fees for ACH transfers, making them a cost-effective solution for sending or receiving money. In addition, ACH transfers are typically easy to initiate through online or mobile banking platforms using only basic recipient details.

Another advantage of ACH is that it offers some protection against errors. Because ACH transactions may be reversed in certain situations, such as when the wrong amount is sent or a transaction is unauthorized, they are often safer for recurring or scheduled payments. While they may take a day or two to process, ACH transfers are efficient for transactions that are not time-sensitive.

Reasons to Use a Wire Transfer Over ACH

Wire transfers are often used when the sender needs funds to arrive quickly and securely. They are typically completed the same day and are settled individually, which means they clear faster than ACH batches. Wire transfers are also used in high-value transactions where speed and finality are important, such as in real estate closings or international payments.

Unlike ACH, wire transfers are not reversible once they are completed, which reduces the risk of disputes in one-time, high-dollar transactions like closing costs. While wire transfers cost more and require more recipient details, their speed and finality make them the preferred method when timing and certainty outweigh the additional cost.

Bottom Line

ACH transfers and wire transfers are two common ways to move money by electronic funds transfer. ACH transfers are usually free, easier to initiate and also may be reversible in case of error. Wire transfers cost significantly more and call for giving the bank a lot of information about the recipient. Wire transfers are generally used for international transfers and when sending large sums. ACH transfers are more likely to be used for direct deposits of paychecks, tax refunds, government benefits and for person-to-person payments.

Money Transfer Tips

A financial advisor can help you with questions about the best way to transfer money and other financial matters. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Online scams often involve people requesting money via wire transfer. Wiring money is riskier because the transactions can’t be undone. Any time an online contact offers an attractive deal on something that will be paid via wire transfer, it pays to be extra-careful before sending any money.