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Difference Between Wire Transfer and ACH

What is a Wire Transfer?

One of the fastest ways to send money is via wire transfer. Although a wire transfer can take days, in most cases a wire transfer takes place within minutes. It is a direct bank-to-bank transaction that allows you to move money from your account directly into the account of someone else. This transfer is conducted as part of an agreement set up between banks that establishes guidelines and allows for such transfers to take place.

When a wire transfer is made from one bank account to another, both account holders are verified. Additionally, the amount of money in each account is verified, so there are no charge backs associated with wire transfers. In general, a wire transfer is fast and secure. Since it is handled individually by the banks and does not go through a clearinghouse first, a wire transfer can take place almost in real time.

Financial institutions often charge fees for receiving wire transfers, as well. Because a little more effort has to be made when receiving, since the institution is contacted directly, many banks and credit unions will charge a fee to receive transfers. However, the fee to receive a transfer is often less than the fee to send a transfer. Wire transfer fees vary according to financial institution, but many institutions charge between $20 and $35 to send a wire transfer, and between $10 and $20 to receive one.

Wire transfers also do not have to take place from bank account to bank account. Western Union and MoneyGram are companies that provide wire transfer capabilities. When you go to a Western Union or MoneyGram provider, you can accomplish a cash wire transfer. You take the money to the approved Western Union or MoneyGram counter, pay the fee, and then the person on your end verifies it with the person on the receiving end. A Western Union or MoneyGram wire transfer can take as little as 10 minutes if everything goes well.

Automated Clearing House (ACH)

While it may seem similar to a wire transfer, a transaction accomplished with the help of an automated clearing house (ACH) is not the same thing. The banking system has utilized the ACH method for more than 40 years. These types of transactions can be quite convenient and are the type utilized when when you use online bill pay, and often when you use your debit card.

When you arrange for the electronic transfer of funds, all of the information is included in a batch, which is then sent to the clearing house. All of the transactions in the batch are then handled by the clearing house, rather than as a direct bank-to-bank transaction. Additionally, banks receive their ACH transactions at once, as well, processing those as a single transaction, in a batch. This approach simplifies the process, since each individual transaction does not need individual attention - it is all automated.

As a result, your money is not available as quickly as it often is with a wire transfer. The ACH process can be more convenient and is less expensive, but it also takes a little bit longer. This is why you often have to make sure that bill payments are scheduled a few days early. Additionally, when you deposit a check, the ACH system means that the funds from the check writer’s bank will not be cleared until the batch is run. So you will not have access to all of your money until at least the next day in many cases (and sometimes longer). You need to account for this when making deposits and planning on automatic bill pay and other transactions. Otherwise, your payments might not be received in time, and you might be subject to overdraft fees.

Wire Transfer vs. ACH

Because a wire transfer requires the individual bank-to-bank process, it is usually more expensive than an automated clearing house (ACH) transaction, which requires minimal involvement by individuals at the financial institutions involved. Many ACH transactions come with only a small fee, or even no fee at all, since they are run with more efficiency. However, if you want a better guarantee that your money will arrive on time, it might be worth it to pay the wire transfer fee.

With both cases, it is possible for errors to be made. However, since you often get to review the information before it is sent with a wire transfer, the method is a little more secure. Also, because identities are verified with wire transfers that take place between bank accounts, the chance of fraud is lower. Wire transfers that take place between financial institutions are generally considered quite secure.

Dangers of Cash Wire Transfers

Most of the issues arising from wire transfers are related to cash wire transfers, like those made at Western Union or MoneyGram. While it can be a convenient way to send cash to relatives at a distance when in a pinch, a cash wire transfer also has its problems. The main issue is that there is no verifying of the sender and the recipient. A false identity can be used at one end of the transaction, with a fraudster collecting the money.

Another issue is that someone collecting the money can just disappear with the cash, leaving almost no trace. If you buy something using a cash wire transfer, you have no simple recourse if the seller receives the money but does not send the promised item. Even if you do get the item, if you have used a cash wire transfer to pay for it, you have no guaranteed help if the item is damaged, or if it is not what was promised. A credit card allows you some protection, and ACH transactions have fraud liability laws associated with them. When you send cash via wire transfer, you are not protected in the same way.

Bottom Line

Wire transfers can be fast and convenient. They represent a quick way to transfer money from one bank or credit union account to another bank or credit union account and can also provide a quick way to send cash to someone who lives far away. However, wire transfers are also more expensive. If you have some time, sending money electronically through the ACH system can be a good choice. However, if the money needs to be transferred more quickly, you may have to pay the fee and get a wire transfer.

  |     |   Comment #1
Another way to look it is to compare with process of sending documents by snail mail, email and fax.

When you send email you cannot be sure if recipient is the intended person only. Fax is sent in real time since there is a direct circuit link between the two parties and you are sure who and when gets the message but it is still a photocopy of the document. Only s-mail can transfer oroginal document but it may take days.
  |     |   Comment #85
As president-elect said, it's time to come back to simple USPS mail again
  |     |   Comment #87
Only if that is a statement you can believe...and most importantly rely upon!
  |     |   Comment #2
That analogy is a little confusing. If talking about the underlying physical methods of transfer, you're right. But on a user level, I see email and fax the other way around. An email will arrive in the inbox that only the recipient can access, while anyone could walk by and pick up a fax off the machine.
  |     |   Comment #3
Any email can be easily intercepted and monitored by hackers or FBI etc before it reaches your inbox.

How can anyone walk by a fax machine in your home or office? fax machine will deliver the  fax only after a secure connection is established.
  |     |   Comment #38
You ask how it is possible for a person to walk by a fax machine and take a fax not meant for them? Seriously? This is a difficult scenario for you to imagine? For example, I work in an office with around a hundred others and we share about a dozen fax machines. I have often missed faxes that were swept up or thrown out by irresponsible co-workers. It's practically negligent to send sensitive information this way.
  |     |   Comment #41
Depends on location of FAX machine.  Some are very secure because they are in a secure location and are used for sensitive confidential information because no one can intercept a FAX during transmission.  Email on the other hand is very insecure, someone could intercept it without either the sender or receiver ever knowing.
  |     |   Comment #128
In a CORPORATE OR NON HOME ENVIRONMENT, ANYONE can pick up a fax. There is no security in that sense. Yes, it may be TRANSMITTED securely, but there is no way to know, other than receiving conformation from the end person, if they ACTUALLY received it or not. End of story.
  |     |   Comment #4
If you don't understand this simple, in-depth description of ACH vs. wire transfers, than analogies aren't going to help you.
  |     |   Comment #9
Have had bad experiences with wire transfers due to the human element

Instructed a major institution to send two seperate wire transfers of the same amount to two different institutions. They sent them both to the same place. I could understand if they had viewed the second one as a duplicate and not executed it.

Took several days to figure this out because the receving institution simply tossed the extra $100K in the $5 savings account.

Lesson is to make multiple transfers of slightly different amount to make tracing easier.

In most institutions, wire transfers are so rare that they are handled by only one or two people. Got caught one time where the person was out for a day.

If you are near the sending institution you can go in, get a cashiers check, and FedEx the check to a specific person or department. Costs less than wire transfer. You get credit the day it arrives.

  |     |   Comment #10
Have had bad experiences with wire transfers due to the human element

Instructed a major institution to send two seperate wire transfers of the same amount to two different institutions. They sent them both to the same place. I could understand if they had viewed the second one as a duplicate and not executed it.

Took several days to figure this out because the receving institution simply tossed the extra $100K in the $5 savings account.

Lesson is to make multiple transfers of slightly different amount to make tracing easier.

In most institutions, wire transfers are so rare that they are handled by only one or two people. Got caught one time where the person was out for a day.

If you are near the sending institution you can go in, get a cashiers check, and FedEx the check to a specific person or department. Costs less than wire transfer. You get credit the day it arrives.
  |     |   Comment #13
Response to #9. The cashier's check method works well. Depending on the sending/receiving bank fees, it could be less costly. Wiring sometimes takes an extra day anyway, due to time zones and bank hours (since a "real" person is needed). For both cases, if you don't go into the branch, a memo can work, but you'll still need to get a signature guarantee. Patriot Act and all that (is what they say).
  |     |   Comment #15
Are wire transfers and ACH's FDIC insured? Do they ever disappear?
  |     |   Comment #16
To 9&13, Only the first $5,000 is available on cashier checks. Depending on the routing number funds  can be on hold for up to 3 weeks and longer if the bank thinks it is suspicious.
  |     |   Comment #18
This was my first wire transfer, and my last! I was told it was instant, from one branch, told it would be 2 hours, from the sender. Then my bank said 24 - 48 hours. The institution from where my money was being wired, did so at noon on weds. Nov.23. So let's cut out the next day, Thanksgiving. So, on Friday, at noon, 11/25/11, we' ll call that 24 hours. My bank is open on Saturday, did I get it? Nooooo, "they don't do wires on Saturdays"!!!! I swear to God I'm going to have some choice words for them if I don't have my money tomorrow (Monday)!!!!!!
John Mullen
  |     |   Comment #19
I get so tired of these lies. In today's word everything is technically a "wire transfer" (unless it's a book transfer). I speak from experience as I used to work in the funds transfer department of a major bank for several years.  ACH is simply just a different medium from Fedwire, SWIFT, or CHIPS  but ultimately every payment has to be debited from one account  transmitted to another institution, or intermediary,  then deposited into another account. It's nothing but a glorified (outdated and slow) email system. It doesn't really "cost" more to send one large automated machine processed email message than it does to send  several hundred smaller similarly automatically processed email messages.  Banks even use the same systems to process incoming and outgoing funds. I used to process CHIPS, Fedwre, ACH and SWIFT payments, both incoming and outgoing in the same window on my computer screen. Charging $25 to send or receive a "wire transfer" is like charing $25 to send or receive an email message. Claiming that an ACH payment is not a "wire transfer" is like claiming  that sending a file via MSN messenger vs  Skype or FTP is not a "file transfer'.  Even checks ultimately generate "wire transfers" today and in theory could be executed immediately, but banks are still trying to pretend that computers don't exist so that they can sit on the float for 3 or 4 days. It's all one big scam. In Europe "wire transfers" are free to both send and receive. But in the US banks just like to treat these  "wire transfers" as if they are some kind of complex magical beast. They are not. US banks just use the term "wire transfer" as a marketing tool so that they can extract exorbitant fees from ignorant customers.
  |     |   Comment #33
I agree with some of what you wrote.  At Alliant CU ACH is both free and quite fast, with money moving within the space of 24 hours.  That might not be up to your standard, but I can live with it.

As for wiring of funds, it's something I did only recently, at a cost of $20.  There was time involved, by at least three employees of my financial institution, to process my wire.   Part of that was to ensure absolute accuracy, as a very large sum of money was involved.  I appreciated the effort which went into executing my transfer properly.  I was not wrankled by having to pay the $20.  However, at the same time:

For smaller amounts of money I can agree an automated wire transfer facility would be appropriate.  The cost, as you suggest, would need to be very much reduced.  Direct involvement of financial institution employees would need to be eliminated.  Customers would enter all data via computer, and customers would be held responsible for any errors in the information they entered.
  |     |   Comment #34
How is charging $25 to send a wire like charging $25 to send an email? A person who earns a salary is providing a service. There IS a cost to sending wires per the article's well-written description of said costs ("individual attention"). Do you suppose the bank should not be paid for that service?
  |     |   Comment #78
Sounds great. From now on I'll charge my clients $25 for every email I send to them and $15 for every email I receive and read from them. Why don't all companies do that, I wonder.
  |     |   Comment #82
Almost all lawyers and some doctors do include emails in billable time, so it's not a flat $25, can be a a lot more!
  |     |   Comment #83
I charge based upon my normal hourly rate associated with any/all communications
  |     |   Comment #89
I had wire transfer from other country. I gave them all info, SWIFT#... My bank has a SWIFT account... I, as a receiving side was charged three times, not two- outgoing and incoming. Something in-between, intermediate. I asked customer service rep. in my local branch what is this, mistake? She could not understand, began to call somewhere else and I saw puzzle on her face. Finally she told, that money were transferred in other branch of my bank in New York, they charged their fee and then transferred to my local branch. When I asked why did they do this way, the answer was, they do so. Any explanation?
  |     |   Comment #90
I use Swift a lot with a separate account in US (at my local bank) and have found that the funds from overseas go to corporate office and then to me...at my local branch but it has worked well with no fee for receiving...foreign payor has a fee...but that is their problem since my payments are net in any event
  |     |   Comment #93
  |     |   Comment #21
I have to add a positive comment about wiring.  Even though it's not cheap, I can wire money from Saudi Arabia, where I currently live and it will be at the intended within 10 mins.  Have not had one problem so far.  However, this time I sent the money from a local bank here to my bank in the US via ACH.  Today will be the 4th business day, let's see!
  |     |   Comment #23
Thank you........
  |     |   Comment #24
Thank you for writing this simple and well-worded article. I have been working at a global investment bank for almost 10 years, including 4 years on the trading desk, and despite this never really gotten into the mechanics of cash transfer and settlements. This article and the following one (Using Wire Payments) have been very educational and mean I've got a better appreciation for the process now.
  |     |   Comment #68
Found this well versed and easily understood!  I am new to ACH so it is informative!  Thanks!  
  |     |   Comment #25
I ask my clients to pay invoices using wire transfers. The issue I consistantly have is that when a wire is iisued from a banking instituion the issuing banks may often use intermediateries that will deduct aditional fees ($15-20.) directly from the wire amount WITHOUT any requirement for disclosure or record to the sender or receiver (note: this is not the bank fees associted to the issuing bank or receiving bank which is receorded and shown on statements) My question is why are these amounts not presented and recorded and what happens to this money and how are banks liable for taxes on "income" generated from these hidden charges?. Why are there also no legal action to change this?
  |     |   Comment #36
The bank that sends the wire is charging a fee to your client. Your client should be smart enough to know what fees they are being charged by their own bank. They should send send the invoice amount + wire fee to you so that you receive what you are owed. That is industry standard.
User from Mexico and US
  |     |   Comment #26
I am very impressed that Mexico has a faster, better, more reliable, and much much much cheaper inter-bank transfer system than the US.  In Mexico the latest version of the system/interbank standard is called "SPEI" (in order of appearance, the translated idea is "system payments electronic interbank"), and it works marvelously.  To the person issuing the SPEI transfer, the cost is seldom slightly over the equivalent of US$1 Dollar, regardless ot the SPEI amount; actually, the average cost for a SPEI to the issuer is only about 50 US cents; and often these transactions, depending on the bank and bank account, are even FREE to issue.  AND THE SPEIS ARE ALWAYS FREE TO RECEIVE (provided the receipient also has a bank account).  The funds usually show up in the destination accounts in minutes (during banking days and hours), and can be programmed online up to one month in advance.  In Mexico, with SPEIs, there is no such thing as the ridiculous outrageous and abusive "incoming wire fees" as it happens in the US.   When I try transfer ("wire transfer") in the US, I always get charged a fortune for either making them or receiving them.  In the States, what use is it to have somebody pay you, say, US$100 to your bank account via wire transfer, when there will be charged US$12 commission to receive those funds and end up only with a net of US$88??  Really??  A 12% commission just to get a deposit ("an incoming wire")??  I wouldn't want to annualize that in terms of APR!!!!  I agree with John in comment #19.  Something is fishy with US bank transfer/wires schemes.
  |     |   Comment #35
My guess is that with SPEI, YOU enter all of the information yourself, therefore taking on all of the risk and effort involved yourself. That is why it is free. At my personal bank, I can do the same thing with funds. I can transfer it immediately to anyone's account to which I know the account number. It is free. I live in the U.S.A.
  |     |   Comment #66
Where do you bank Dana?
  |     |   Comment #86
I don't know where Dana banks, but the same free money transfer to anybody's account at Bank of America
  |     |   Comment #28
U.S.banks always do their best to rip customers and they have achieved at the shameless level of art of corruption.  The innovation is always about how to rip customers.

Why is incoming wire transfer charging free or $10 and outgoing charging $30 to $60? 

If U.S. banks don't charge fees, they have no way to create "shareholder values" and "customer values!"

  |     |   Comment #37
Taking in a wire requires much less time, effort and risk. Sending a wire requires multiple levels of authorization and takes anywhere from ten minutes to an hour or more to be sent, requiring the attention of at least three individuals. That is why.
  |     |   Comment #30
Can someone advise me what is the difference between an ACH, Wire transfer and just giving one institution the routing number and account number for your savings account and letting them withdraw the funds you want to have them deposit into your savings account at "their" institution so that you can then purchase a couple of CDs over the phone from them?  Is it more dangerous to do it this way than to pay for a Wire transfrer or ACH transfer?  Thanks so much!
  |     |   Comment #31
This info. helped me understand better about Wires and Ach transfers!
  |     |   Comment #32
Wire Transfer Systems and ACH systems take a large amount of expense to implement and operate.  Why is anyone surprised that there are fees for these institutions to cover their costs and a margin of profitability?
  |     |   Comment #42
Sooooooooooooo, how can/does one object to ACH/wire transfer from "your" account w/o your prior approval?  What are "you" doing to have your bank/cu not make any/all transfers w/o your consent?  Are there any financial institutions that do that?
  |     |   Comment #47
I do not understand why your own bank you have had an account with for years, makes you wait 4 to 5 days to cash a check, that you have received from either a company or person?
Why can they not do an EFT like they do with your own personal account?
  |     |   Comment #48
So who collects the intrest on money that is in a ach transfer when its being processed   
  |     |   Comment #50
At least I have an idea already about this.
Jenny Krish Moore
  |     |   Comment #51
This only partially answers my question....  HOW LONG is the little longer the ACH takes.  Pay Pal says 3-5 business days AFTER the amount is removed from your account [if your pay pal account is linked to your local bank account].  I can't find any information as to what is usual and customary length of time that ACH takes to process those "batches" of money transfers.
  |     |   Comment #52
My bank does it that day.  Check the regulations for "legal" guidance as to what is permitted as well as Ken's write up on the differences, etc.
  |     |   Comment #53
I have never had a problem with ACHs.  It is always done in one day and shows up on the account it was taken from that same day.  I think wire transfers take longer because they depend on going through the other system before they can get the money.
  |     |   Comment #88
I have no problem with ACHs as well. BUT!!! It takes at list 3 days to have money available for withdrawal on the other end. So have to plan transactions ahead!
  |     |   Comment #54
`why is ACH and wire transfer classified as the better from cash transfer?
  |     |   Comment #55
Money sent via ACH is withdrawn from a bank, sent to the Fed Reserve, then deposited into a bank.  Money seems to be in limbo for at least a day or more, losing the sender the interest on it.  Some institution must be benefiting on the float.  
  |     |   Comment #56
Sorry, but "The main issue is that there is no verifying the sender and the recipient. A false identity can be used at one of the transaction, with a fraudster collecting the money" is just not true.
Western Union, MoneyGram or Ria have obligations to identify senders and receivers in country depending on financial regulations. 
A false identity can be used to open a bank account just as easily - it is a wildly optimistic statement that a bank wire transfer is safer, considering the many FinCen fines levied to banks for non compliance
  |     |   Comment #58
i made a wire transfer online through my bank to the recipients bank account.  The recipient's bank said it cannot receive it because it is an ACH Transfer.  How do I correct this?
  |     |   Comment #59
Did you notify your bank about the wire transfer and get the correct wire info to give to the receiving bank?  I have done wire transfers without any problem as long as certain requirements were met.  I usually call the receiving bank to tell them to expect a wire transfer of a certain amount of money and also get the necessary info from the sending bank to give to the receiving bank.  Without this info, it would have to go through as an ACH and for some reason certain banks will not accept an ACH  You may have to redo it correctly as a wire transfer.
Anonymous Tesla
  |     |   Comment #60
Wire transfers; the human factor of the banks' clerks and the details and follow-up is very challenging!  I've done them but do my best to avoid this tedium.  Is there a website that thoroughly (reliably) explains the mechanics of a wire transfer?
  |     |   Comment #61
If you're looking to find a swift code for the bank you're trying to send money to, you ca use: http://bank-code.net/
  |     |   Comment #63
  |     |   Comment #67
This article contradicts itself where under dangers of cash wire transfers it list a bunch of pitholes theni at the end it states;  the A credit card allows you some protection, and there are fraud liability laws associated with ACH transactions. When you send cash via wire transfer, you are protected the same way. does not make any sense
  |     |   Comment #69
My experience was, ACH took 5 business days with no fees, WT took 1 business day with fees. Both had worked well, it all matters down to time.
  |     |   Comment #70
I am wondering when doing an ACH transfer that you might be more assured that the transferred amount ends up at the right account if you do a pull in lieu of a push ACH transfer.  
  |     |   Comment #73
I recently had a difficult experience at NFCU, a large credit union.  I attempted to pull, via ACH, money out of my NFCU savings account.  I did not realize NFCU does not allow ACH withdrawals from savings . . only ACH deposits are allowed.  This is not a circumstance I have encountered at any other of the numerous credit unions where I am a member.

Fortunately the withdrawal amount was relatively small, so I simply requested they send me a (paper) check.  But under other circumstances I would have been forced to use a wire transfer.  Inability to withdraw funds using ACH is so last century.  I just assumed . . . . . . and I assumed wrong! . . . . . so be careful.  It is difficult to believe, but apparently not all financial institution management is aware of the importance of ACH to their customers.  
  |     |   Comment #74
Think about how one can challenge ACD transfers "out" and you should be glad it is not that way!
  |     |   Comment #75
What is an ACD transfer?
  |     |   Comment #76
ACH...got it now?
Igor  Mochernyak
  |     |   Comment #77
In addition, the net payment service allows you to grasp at once if the person creating the net payment has ample funds to hide the dealing – instead of sorting out per week later once the check bounces.
  |     |   Comment #91
I was about to write only to thank the writer, Ms. Marquit, for the excellent summary of ACH vs. wire transfer. I still write to thank her, but having noticed the recent comments on the President elects comments I have to add a bit to it. Note that Mr. Trump didn't suggest that we go back to USPS for secure mail, he said "write a letter and send it by courier". He was a bit tongue in cheek (as he often is), but was recognizing that there is no form of fully secure communications - some are more secure than others. Email happens to be very secure while in transmission (due to the packet switching nature of the transmission), but is vulnerable once it reaches the email server where it stays in residence even after transmitted to the final recipient. My point is that Ms. Marquit was comparing ACH vs. wire transfer of funds - all other comparisons or analogies are irrelevant - including check by snail mail (I get a monthly one in small envelope, the envelope is often torn by the USPS machines). Best, Jon
  |     |   Comment #99
Is Western Union wire transfers backed by FedWire?
J white
  |     |   Comment #103
Shall i send my username and password for a person to conduct a wire tranfer to me?
  |     |   Comment #104
just be sure they're from Nigeria National Bank
  |     |   Comment #105
J white
in case you are serious
NO !
Fooled Again
  |     |   Comment #112
Very helpful information. However, I have made international bank transfers routinely, for more than a decade. Right now, a bank to bank transfer from the US to France is simply unaccounted for the last 3 weeks! Seems like either bank to bank transfers are not safe or our ever vigilant government 'terrorizes' us by holding up or making disappear our savings!!

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