ACH vs Wire Transfer: What’s the Difference?

There are several payment technologies that you can use to transfer money between two bank accounts, the two most common being automated clearing houses (ACHs) and wire transfers. They are both used extensively by banks throughout the United States. Whether you need to send or receive money, you can use an ACH or wire transfer. With that said ACHs and wire transfers aren’t the same. They work in different ways and have their own unique benefits. To learn more about the differences between ACHs and wire transfers, keep reading.

What Is an ACH?

An ACH is a type of bank-to-bank transfer that’s facilitated by the automated clearing house network. It’s also known as a direct deposit. During an ACH transfer, the payor’s bank sends a request to the recipient’s bank. Once grated, the payment is routed through the ACH network before landing in the recipient’s account.

It’s important to note that not all banks support ACH transfers. While most banks support wire transfers, only some of them support ACH transfers. Therefore, you’ll need to check beforehand to determine whether your bank account the other bank account supports ACH transfers. If either of the banks don’t support it, you’ll have to use an alternative solution, such as a wire transfer.

What Is a Wire Transfer?

A wire transfer is a type of bank-to-bank transfer that bypasses the automated clearing house network. Instead of using the automated clearing house network, it uses the payor’s and recipient’s routing numbers and account numbers.

Wire transfers are more common. Since they don’t go through the automated clearing house network, they are supported by more banks. A bank doesn’t have to participate in the automated clearing house network to support wire transfers.

Which Is Best?

Both ACH and wire transfers offer their own benefits. Wire transfers, for instance, are supported by more banks. Even if a bank doesn’t offer ACH transfers, it probably offers wire transfers.

Wire transfers are also faster. Most banks can process a wire transfer in just 24 hours. In comparison, it may take them several days to complete an ACH transfer.

On the other hand, ACH transfers typically cost less than wire transfers. Many banks offer ACH transfers at no additional charge. You can send or receive money for free using an ACH transfer. In comparison, banks often charge between $20 to $40 per wire transfer.

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