Personal Finance

6 min read

June 24, 2021

ACH vs. Wire Transfer: The Differences

We’re here to help you learn more about the differences between the two transfer methods, including how safe and affordable each type of transfer is.

In today’s world, checks and cash are making their way out. When someone needs to send or receive money, an electronic transfer is preferable. There’s no paper to get lost in the mail or cash that can be lost.

Two common ways to send electronic transfers are via ACH or a wire transfer. We’ll go over and weigh up both options to share the differences, including important factors for you to consider.

ACH vs. Wire Transfer: What's the Difference?

Let’s begin with the basics. ACH and wire transfers are both ways you can send money electronically. But there are some key differences to consider. 

ACH stands for Automated Clearing House, and is a network that works with thousands of financial institutions. Through this network, it’s possible to submit direct deposits or direct payments. 

So for example, you may be able to use ACH to set up bill payment, pay employees, or receive direct deposits from your job. While ACH is available for domestic transfer transactions, you may be able to use their partner, Global ACH, for international transactions. 

OnJuno will be launching an in-app international money transfer feature soon — join our waitlist to be among the first to know when it’s live.

Wire transfers are a type of electronic transfer, sometimes known as interbank payment — from one bank account to another bank. There are both domestic and international wire transfers, and you may see international wire transfers referred to as ‘international money transfers’ or ‘remittance transfers’.

Both ACH and wire transfers may have transfer limits, so do check with your financial institution if you’re concerned about how much you can send. 

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ACH vs. Wire Transfer: Which is Cheaper?

If you’re considering an electronic transfer of money, you want to be mindful of cost. You don’t want to spend too much money just to send money. Comparing ACH vs. wire transfer, ACH again is the winner. ACH is free for recipients. Money transfer apps like PayPal or Venmo may have a small fee attached. If you own a business, you also must pay a fee but there is no cost for your employees. OnJuno also offers free ACH transfers as well, making it a good fit if you’re looking for a bank to make transfers easy. 

If you need free ACH transfers, then a banking option like OnJuno can help you do what you need to do to take care of your finances. 

On the other hand, wire transfers can be much costlier. In general, you can expect wire transfers to be $10 to $35 a pop. If you’re sending money overseas, that amount may increase.

ACH vs. Wire Transfer: Which is Safer?

When it comes to ACH vs. wire transfer, you may wonder which is the safer option. In general, ACH is the safer option. Why? Because through ACH, it’s possible for the transaction to be reversed if there is a mistake or instance of fraud as noted by The Federal Trade Commission

You may also be aware of how common wire transfer scams are. If you receive a wire transfer, it’s likely the payment is fine. However, if you are the one being asked to send a wire transfer, make sure you know the recipient you are sending it to. Wire transfers typically can’t be reversed, making them riskier. 

According to the Federal Trade Commission’s website, here are some tips for avoiding wire transfer fraud:

Never wire money to anyone:

  • You haven’t met in person;
  • Who says they work at a government agency like the IRS, SSA, or a well-known company;
  • Who pressures you into paying immediately;
  • Who says a wire transfer is the only way you can pay.

If you have been a victim of fraud, be sure to report it.

ACH vs. Wire Transfer: Which is Faster?

One of the main differences between wire transfers and ACH is that wire transfers are processed faster. Wire transfers are typically done within a day and funds are transferred immediately. Depending on the bank deadline, funds could be available for use on the same day or the next day at the latest. 

Although ACH transfers can take up to several days, they’re typically faster, and can be completed within one business day. However, you may see the amount “pending” for a few days as the transaction status in your account. 

A wire transfer can be thought of as an electronic cashier’s check, because the accounts don’t have to be linked. Rather, the bank account number, as well as the routing number, are used to initiate the wire transfer. 

Bottom Line 

If you need to send money, receive payment, or set up bill payment, ACH is the preferred way to go as it’s safer and more affordable. There may be some instances, however, in which you’ll need to do a wire transfer. Just make sure to weigh the pros and cons and put your safety as a consumer first.

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Melanie Lockert
Melanie Lockert is the founder of the blog and author of the book, Dear Debt. Her work has appeared on Business Insider, Time, Huffington Post and more.

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