Difference Between ACH and Wire Payment

ACH stands for Automatic Clearing House Payments. In this kind of mode, payments are made directly person-to-person or by direct deposit.

Wire payment is the electronic method of transferring funds from one source to another source. It can be initiated bank to bank via a network like Swift or a Fed wire.

ACH vs Wire Payment

The difference between ACH and Wire payment is that in ACH, the transfers can take two to three days to clear the payment, but in Wire payment, it is quick, it takes only a couple of hours to clear the payment.

Ach vs Wire payment

 

Comparison Table

Parameter of ComparisonACHWire Payment
ConceptIn ACH, payments are made directly person-to-person or by direct deposit.In Wire payment, funds are transferred from one bank to another to make payments.
Transfer SpeedIn ACH, transfers take usually two to three days to complete.In Wire payment, it takes a maximum of 1 day to transfer the funds.
Certainty and safetyACH transfers are quite safe but ACH transfers can be reserved into your account.It is relatively a safe and secure way to get paid.
CostACH transfers are almost free to customers. Only maintenance fee costs.Wire payment charge between 10 dollars to 35 dollars to send payments.
Common Uses1. Employee wages
2. Recurring bills
3. One-off payments
1. Speedy Payments
2. Property down payments

 

What is ACH?

ACH stands for Automatic Clearing House Payments. It is an electronic funds transfer system that moves money between bank accounts.

How does an ACH payment work?

  1. One wants to collect an ACH payment from a customer.
  2. He receives authorization from the customer.
  3. Bank connects directly to the ACH processor.
  4. The processor receives the transaction data and forwards it to the customer’s bank.
  5. Your customer’s bank receives the transaction.
  6. The customer and the processor verify whether the submitted information is correct.
  7. The processor distributes the ACH file to your bank.
  8. Your bank posts payment to your account.

What are the common examples of ACH payments? 

  1. Direct deposit of your wages.
  2. Automatic payment of bills such as the energy bill.
  3. Payments from businesses to vendors and suppliers.
ach
 

What is Wire Payment?

Wire payment is the electronic method of transferring funds from one source to another source. It can be initiated bank to bank via a network like Swift or a Fed wire.

How does Wire payment work?

  1. The person who wants to send money goes to a Remittance service provider enters the bank and the receiver’s details.
  2. The bank gives the sender a deposit slip.
  3. The sender submits wire transform form in the local bank to start the transaction process.
  4. Local bank transfers funds to its corresponding bank.
  5. The corresponding bank transfers money to the Remittance service provider.
  6. In the end, the receiver receives the money from the Remittance service provider.

What are the common examples of Wire payments? 

  1. Property down payments.
  2. Speedy payments.
wire payment

Main Differences Between ACH and Wire Payment

  1. The major difference between ACH and Wire payment is that, in ACH, the transfers can take two to three days to clear the payment, but in Wire payment, it is quick, it takes only a couple of hours to clear the payment.
  2. In ACH, payments are made directly person-to-person or by direct deposit whereas, in Wire payment, funds are moved from one bank to another within one business day.
  3. In ACH, one can both send and request payments whereas, in Wire payment, one can only send payments.
  4. ACH transfers are very much free to customers. Only maintenance fee costs whereas Wire payment charges between 10 dollars to 35 dollars to send payments.
  5. ACH payments are more secured as compared to Wire payments.
  6. In ACH payments, there is no human intervention whereas Wire payments are completed by bank workers and employees. 

References

  1. https://www.degruyter.com/view/journals/rne/2/2/article-rne.2003.2.2.1024.xml.xml
  2. https://fraser.stlouisfed.org/files/docs/publications/frbclevreview/pages/1995-1999/68731_1995-1999.pdf
  3. https://www.ingentaconnect.com/content/hsp/jpss/2016/00000010/00000003/art00003
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