ACH vs. wire transfer: What’s the difference?
Both ACH and wire transfers work in a similar way, but with different timelines and rules. Wire transfers are direct, generally immediate transfers between two financial institutions. ACH transfers, meanwhile, pass through the Automated Clearing House, and can take up to a few business days.
In total, there are seven major differences between ACH transfers and wire transfers. We explore them in detail below.
Note: “Cleared” means that the transaction details have been passed on. “Settled” means the two banks have exchanged money to honor the underlying transaction. “Disbursed” means the funds have been released to the end account holder.
1. Transfer speed
Domestic wire transfers usually clear within minutes and settles within a business day. ACH transfers can take between hours and days to both clear and settle.
How long does an ACH transfer take? The time it takes an ACH transfer to clear can vary. If the originator pays the extra fee for same-day processing and the transaction is initiated on a business day within one of the three same-day processing windows, then clearance, settlement, and disbursem*nt will all happen that day. Otherwise, settlement will happen the morning of the next business day. Unless there is an error, disbursem*nt happens within minutes to a few hours.
How long does a wire transfer take? A wire transfer clears as soon as the receiving bank signs off on the incoming message. This happens either immediately or following any routine due diligence. If the sender pays a premium to use Fedwire, the transfer settles and disburses immediately. If the transfer is routed through the Clearing House Interbank Payment System (CHIPS) instead, the timeline depends on the time of the transfer's initiation. If sent by the bank’s mid-day deadline, it will typically settle early that evening. Otherwise, it will settle the next business day.
2. Settlement
Wire transfers generally settle permanently. Some ACH transfers, however, can be recalled for up to three months.
ACH transfers can’t be canceled, but can be recalled or disputed. Credit reversals can be requested within five business days due to an error in account number, amount, or date—or if a duplicate. Debits can be disputed by the payer as non-authorized for up to 60 days after the statement date of the transaction in question. Debit transactions can also be returned because of various other reasons, including insufficient funds, for up to two business days.
Wire transfers can be canceled up until they’re cleared (which can be as quick as a matter of minutes). After that, they are generally irrevocable. The main exceptions are if the bank has sent the transfer to the wrong account or for the wrong amount. In cases of sender’s remorse, the sending bank may try to work with the receiving bank, but has limited recourse if the funds have already been withdrawn.
3. Cost
A consumer using ACH to make or receive a payment does not usually pay a fee. Instead, the organization or business with which they're transacting incurs a fee from their payment processor or bank. A consumer using a wire transfer is generally charged a fee.
What is an ACH transfer fee? ACH transfer fees are variable, but generally quite inexpensive—and rarely passed on to consumers. Processing fees can be as little as tenths of a cent per transaction for banks or up to tens of cents or more for payment processors. Higher dollar-value transactions can also incur percentage-based fees with some processing partners. This can reach up to 1-1.5%, but are usually capped at $5. As processing happens in bulk with little to no human intervention, ACH transfers incur less administrative costs.
What is a wire transfer fee? Wire transfers generally charge both parties. Domestic wires tend to cost up to $35 for the sender and up to $20 for the receiver. International wires can incur another $15-30 for the sender, plus any currency exchange fees.
4. Direction
While ACH transfers can either push or pull money, wire transfers can only push money.
ACH transfers are bi-directional. This means they also allow the receiver to initiate a transaction on behalf of the sender. This makes them suitable for more use cases.
Wire transfers are credit transactions, moving money from sender to receiver. This means only the sender can initiate them.
5. Frequency
While ACH transfers can be recurring, wire transfers are generally one-off transactions only.
ACH transfers can allow for recurring transactions. This makes them attractive for regular billers and employers. Standing authorizations can be given, enabling inexpensive regular debit or credit transactions.
Wire transfers are singular transactions by design (at least for consumers). Each new transaction generally requires a new authorization and a new fee.
6. Size
ACH transfers are most often used for smaller and more frequent transactions, while wire transfers are generally used for high-value transactions.
ACH transfers are much higher in volume. The ACH network processed over $72 trillion in transfers in 2021, across 29 billion transactions. That's an average value of roughly $2,500 per transfer. The slower settlement time has historically made ACH more suitable for smaller transactions.
Wire transfers are much larger on average. Fedwire (which settles the majority of US wire transfers) handled $991 trillion in transfers in 2021, across 204 million transactions. That's an average value of roughly $4.8 million per transfer. This number is somewhat inflated: Many transactions clear through CHIPS before settling on a netted basis through Fedwire. Even so, the true average value is considerable.
7. Geography
ACH transfers are currently only used in the US and in a few places with bilateral agreements. Wire transfers are widely used around the world.
ACH transfers are generally limited to the US. Despite occasional pushes for greater interoperability between global networks, the coordination required is quite high.
Wire transfers are broadly supported around the world. A mature network of correspondent banks enables transfers across borders and currencies, with only one or two intermediaries in general. Nonetheless, currency exchange fees can be quite costly at 2-3%.
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