Wire transfers or ACH: Which should you use?

Editorial Team

5 min read
Man looking contemplative at laptop

Wire transfers and the Automated Clearing House (ACH) network are two popular ways to send and receive money electronically. Both methods are so common that they’re sometimes used interchangeably.

For many applications, wire transfers and ACH are essentially the same. But as a merchant, it’s important you understand how these two platforms differ. Doing so allows you to choose the right payment option for your business.

Wire transfers at a glance

A wire transfer is an electronic payment method that allows you to quickly move money between banks. The primary selling point is speed, with most domestic transfers taking one business day. For international transfers, you might need to wait anywhere from one to five business days.1

Each wire transfer is handled individually by partnering banks — at the request of the sender and receiver. Although much of the process can be automated, you still need bank tellers or third-party service cashiers to verify receipt of payment. 

ACH payments at a glance

With ACH payments, senders and receivers can also move money between banks. Settlements typically take two to three business days to complete, although “same day” processing may also be an option depending in the financial institution.1

Whereas banks act as middlemen during wire transfers, the Automated Clearing House network is responsible for connecting sending and receiving parties. Moreover, transactions are processed in batches — instead of individually. 

And as the name suggests, the entire process is “automated” — without any need for direct human intervention. 

ACH and wire transfers: Pros and cons

To understand the relative pros and cons of both payment options, we have to dig a little deeper. More specifically, we’ll look at the payment criteria that typically matter most to merchants: 

  • Cost
  • Security
  • Convenience 

1. ACH vs. wire transfer: Cost

In the U.S., wire transfers are almost never free for senders. If your bank advertises otherwise, you may be using ACH — without knowing it. 

  • Domestic wire transfers range from $25 to $30
  • International transfers cost between $45 and $50
  • Recipients may also be charged a fee – typically around $152

By contrast, ACH is usually free for ordinary users. As a business owner, however, you can expect to pay about $1.50 (or less) per transaction.3

With this cost difference, ACH is the clear winner — especially when sending smaller amounts. As the payment amounts increase, this difference becomes insignificant.

2. ACH vs. wire transfer: Security

Both payment options are secure since they require establishing verified connections between partnering banks. 

However, wire transfers are nearly impossible to reverse once a transaction has gone through. As a seller, this can be advantageous if you’re a frequent victim of chargeback fraud

ACH payments can technically be reversed (this rarely occurs), and banks will authorize reversals only when presented with compelling evidence of an error or fraud. 

Wire transfers enjoy a slight edge when it comes to security (for the recipient), but in most cases these two payment options are pretty evenly matched.

3. ACH vs. wire transfer: Convenience

The setup process for ACH and wire transfers is quite similar. In both cases, senders and receivers must provide payment details in the form of: 

  • Banking names
  • Account numbers
  • Routing numbers
  • Payment amounts 

No surprises there. 

Here are the core differences: With wire transfers, you must go through this initiation process each time you want to send or receive money. A growing number of third-party apps and P2P payment services offer recurring billing services, but often these are just rebranded versions of ACH. 

ACH, however, was designed with recurring billing in mind. The initial setup is almost identical to wire transfers, but once approved, it’s very easy to continue sending and receiving money on a regular basis.  Because of these differences, ACH may be the better choice for smaller, ongoing payments such as:

  • Subscription-based services (e.g., monthly utilities or car loans)
  • Direct deposit payments to cover employee salaries and benefits
  • Personal finance (when transferring money between your banks) 

However, wire transfers are a great option if you plan to do large, one-off transactions. For example, you might have clients who can afford to buy large ticket items without needing installment plans.

Which payment option is best for you: Wire transfers or ACH?

As a general rule, wire transfers are best when speed and certainty are essential to your core business: 

  • Settlements are faster with this electronic payment option
  • Once the money is deposited in your account, it stays 

For most other cases, however, ACH is the better option. Sending money takes a little longer, and there is always the outside chance that transactions can be reversed — but ACH payments are easier to use. Plus, they cost way less than their wire transfer counterparts. 

To learn more about ACH processing, schedule a free consultation with our merchant services team today.

1 “How long does a wire transfer take?” Divvy, 2 February 2021
2 “Wire transfer fees tend to be expensive, but you may be able to lessen the cost depending on your bank,” Business Insider, 12 July 2020
3 “Everything You Need to Know About Accepting ACH Payments,” Merchant Maverick, 8 July 2020

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