Difference Between ACH and SWIFT

Money has become the part and parcel of our life. It plays a necessary role in regards to our modern society and global business.

Over the years banking has modified radically and has globally affected millions of individuals. During this age of development, instead of exchanging cash, checks, and paper works, faster electronic methods of transferring money straightforwardly and inexpensively between two accounts, states and even countries have become more popular.

This method, commonly known as electronic fund transfers, offers convenience, facility of access, guarantee secured transactions, and 24-hour option when it comes to payment of bills, making purchases, and supervising accounts. Electronic fund transfers, such as ACH and SWIFT, have currently become the go-to payment method since these banks help customers facilitate a smooth transfer of funds from one account to another.


The difference between ACH and SWIFT is that ACH transfers can be used by small and medium business because this form of electronic payment processing is user friendly, cost-efficient and helps pay recurring bills whereas, in SWIFT transfers, the small businesses, as well as the recipient, find it uneconomical and expensive to send money internationally.



Comparison Table

Parameter of ComparisonACHSWIFT
MeaningACH is an electronic monetary network for processing payments between two financial organizations.SWIFT is an international money transfer network used by financial institutes and banking sectors to safely and rapidly send money from one bank account to another.
Field of applicationACH transfer funds only within the United States.SWIFT can send funds from one bank to another bank globally without having any cross border limitations.
Speed of transferACH takes 3 to 5 business days to transfer the payments from one bank to another. Hence, the transfer speed is low.SWIFT payments are typically used when authenticity and speed are vital factors.
Cost-efficientEven though ACH transfers aren’t as quick as SWIFT transfers, it is less expensive to initiate and are almost always free for customers.Financial institutes and banks charge a fee for transferring SWIFT payments internationally. It is a costly affair.
Risk involvedACH payments are a tad bit safer for the vendor for he can reverse the fund payments.Under SWIFT payments, there is a bit more risk because once the receiver has accepted the money/payment, the transaction cannot be reversed by the sender.


What is ACH?

ACH (automated clearing house) is an electronic fund transfer network where two parties (i.e, sender and receiver) allow their particular/personal banks to transfer funds securely with each other. ACH is exclusively used only within the United States of America.

Types of ACH payments:

  1. Credit transfers: These payments are solely allowed when the sender authorizes the payment. The recipient initially provides his bank details to the sender and then the sender, along with the bank details, sends certain instructions to his respective bank to pay a certain amount of money to the recipient.
  2. Direct debit: As per this payment system, a certain amount of money is taken from the consumer’s account according to a definite schedule and this money is used to pay consumer bills such as loans, rents, mortgages, and insurance premiums.


  1. ACH is very convenient as the transactions can take place without either the sender or recipient being physically present as ACH specializes mainly in electronic fund transfer. This allows the sender/recipient to focus on the necessary tasks at hand.
  2. ACH transactions protect the users from frauds, as the payments can be made by both the parties only when their particular banks are authorized to cooperate.
  3. Since ACH payments are done quickly, the recipient can check whether he has received his payments, unlike a check which can be lost in transit or stolen. Hence ACH transactions are safe to carry out.
  4. ACH transactions do not involve any material resources unlike checks which use various types of material resources like envelopes, stamps, ink, etc.


  1. ACH payments are not suitable for time-sensitive transactions.
  2. Auto payments are debited from your bank account even though you may have insufficient funds in your account and this could lead to overdraft fees.
  3. Some enterprises may need to undergo training to use or process ACH payments and this could be done only with the help of efficient software.

What is SWIFT?

Established in 1973 in Brussels, Belgium, SWIFT (The Society of Worldwide Interbank Financial Telecommunication) is an international financial network that allows financial organizations globally to quickly, accurately, and securely send and receive information. SWIFT transfers funds to over 10,000 financial establishments in 200 different countries.

For transferring monetary information from one place to another, SWIFT uses codes that are allotted to each financial organization to detail the origin of a transfer, where it proceeds to, and how it reaches there.

This unique identification code has either eight or eleven characters. The code has three names such as:  the Bank Identifier Code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code.


Without SWIFT, most of the international financial transactions would appear almost impossible. Benefits of using SWIFT are as follows:

  1. Traceability.  SWIFT provides clear and recognized proof of payment since it details the route of the transaction between banks and the amount of money concerned.
  2. Security- SWIFT ensures the confidentiality of its customers and users by using its private network and extremely advanced hardware and software systems.
  3. TransparencySWIFT transfers detail the payment information and permit all parties concerned to trace the transaction and acknowledge the costs and time factors involved.
  4. Standard Format- Clear and user-friendly syntax of SWIFT language has makes it easy for the receiver to grasp a message.


The Swift system, along with its benefits, also has some disadvantages. These include:

  1. Most of the small and medium-sized banks cannot become members of the SWIFT system as a result of an expensive entry fee.
  2. When there is an error involved, money transfer is delayed when several members are collaborating in the money transfer and the commission for the operation may rise.
  3. SWIFT messages are an upscale approach of transferring funds because it comes with an operational overhead. Since the money passes through intermediary banks, it comes into contact with the payment and these banks are ready to take a fee without the consent of either the sender or recipient. Moreover, it is possible to be charged with a fee a lot of times if the payment goes through several intermediate banks.

Main Differences Between ACH and SWIFT

  1. ACH is an electronic fund transfer that makes payments from one bank/organization/institution/individual to another bank. SWIFT is a member-owned monetary cooperative network system employed by banks or financial organizations to transfer funds internationally.
  2. ACH cannot transfer funds globally but can transfer funds within the United States. SWIFT can internationally transfer funds from one bank to another.
  3. The transfer speed of ACH is relatively low because it takes 3-5 business days to transfer funds from the sender to the recipient. Under SWIFT, the payments can be done immediately when in a hurry as it takes solely 1-2 business days to transfer funds from one bank to another, depending on the country the payments are made to.
  4. ACH is comparatively cheaper as ACH payments are sometimes free of cost to their customers and are mostly transactions that are a few dollars at most. SWIFT charges a high fee to transfer funds from one bank to another bank internationally mainly due to fees taken by intermediary banks.
  5. Under ACH transfers, there’s less fraud risk because the payments can be reversed by the sender in case there is any payment error. SWIFT payments cannot be reversed once the recipient has accepted the funds.


  1. https://iopscience.iop.org/article/10.1086/500724/meta
  2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC223059/
  3. https://www.jstor.org/stable/513361
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