• Fri. Jun 21st, 2024

Wire Transfers vs. ACH Transfers – What is the Difference?

Louise Villalobos

ByLouise Villalobos

Jan 28, 2024
Wire Transfers vs. ACH Transfers - What is the Difference?

Nowadays, you can conveniently send money electronically from your bank account through wire transfers or ACH (automated clearing house). In this article, you will focus on ACH and wire transfers. Keep reading to learn the difference between the two.

ACH transfers

ACH transactions involve transferring money between credit unions or banks via an electronic network. Such transactions can be used for several purposes. For example, they can used to process healthcare claim payments, one-time bill payments, and business-to-business (B2B) payments.

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Many consumers make use of ACH transfers since they are free. Moreover, most payment processing platforms like PayPal, Zelle, and Venmo rely on ACH to make funds transfers. In 2023, over $20 trillion worth of ACH payments were processed.

How Do ACH Transfers Work?

Here is how an ACH transfer works: You first initiate an ACH transfer through your bank. The bank then groups your ACH transfer with other transfers and processes them via a clearing house. Once the ACH transfers are processed, your bank sends them to the receiving bank, where they are credited to the appropriate accounts.

Wire Transfers

These fund transfers involve transferring money from your bank to an external one, which can be operating within your country or abroad. Wire transfers are usually used to make transactions involving huge amounts of cash.

How Do Wire Transfers Work?

With a wire transfer, financial institutions communicate with each other to move money between accounts. You need to provide the name of the bank, including details like the transaction amount, the receiver’s account number, name, phone number, and their bank’s physical address.

After providing these details, your bank deducts money from your account and credits it to the receiver’s bank account. It is important to mention that when a wire transfer payment is processed, it can’t be reversed.

Major Differences Between Wire Transfers and ACH Transfers

Transaction Type

ACH transfers are usually used to make bill payments and transfer money to friends. Also, most companies use such money transfers when depositing the salaries of employees into their accounts. Wire transfers, on the other hand, are ideal for making transactions with large amounts, like car purchases or real estate transactions.


Most ACH transfers happen between financial institutions located in the same country. As for wire transfers, they can be sent to other financial institutions operating abroad.


Domestic wire transfers are normally processed within a day. But it is advisable to submit your transfer request early. Otherwise, your wire transfer will be processed the following day. As for international wire transfers, they can take up to 10 days to complete. Meanwhile, most banks process ACH transfers a day after customers initiate them. They can take around three days to complete.


In most cases, banks do not impose any fees on ACH transfers. Even if they do, the transaction cost will be cheaper than that associated with wire transfers. When making a domestic wire transfer, you will be charged approximately $25, while it might cost you $50 to make an international wire transfer.


Banks have put limits on how much you can transfer via ACH within a day or a month. Wire transfers, on the other hand, do not come with such limits, and that’s why they are ideal for sending huge amounts of funds.


Wire and ACH transfers are both secure. However, they are vulnerable to fraud. In most cases, fraudsters target ACH transfers made by governments. Further, they use wire fraud to steal from unsuspecting victims. For instance, scammers can send you a message informing you that you’re a winner of a particular contest, but in order to claim the prize, you need to pay processing fees via a wire transfer. After wiring the funds, the fraudsters disappear.


Wire transfers can’t be reversed after being approved, while there are several ways to reverse or stop an ACH transfer.


Both wire and ACH transfers have their own strengths and weaknesses. Choosing which one to use depends on the type of payment you want to make.

Louise Villalobos

Louise Villalobos

Louise Villalobos is an adept writer, renowned for her compelling articles that illuminate and engage. Her prowess in breaking down intricate subjects provides readers with clarity and nuance. With a vast and varied portfolio, Louise has solidified her standing as a distinguished voice in contemporary journalism.