Wire transfers and ACH payments may seem similar, almost identical. However, the two are quite different, and understanding the differences between them is beneficial for anyone who is interested in using electronic methods of payments for moving money to and from bank accounts. ACH payments are more convenient, and cheaper, as well as more secure. On the other hand, wire transfers are quicker. Each can be used for different means but in most financial situations using an ACH payment to transfer money is a better choice.
Wire Transfers
Wire transfers move money between financial institutions to and from bank accounts. The financial institutions are doing most of the moving, and thus charge heavy fees to send and receive money through a wire transfer, which can go up to $30 a transfer. Because the wire transfer is done mostly through financial institution personnel, there is little to no wait time for a wire transfer.
ACH Payments
ACH are similar to wire transfers, the information is sent in a batch to the automated clearinghouse, which clear the payments through and then send them onto the bank. The clearing house essentially acts as the middle man, receiving the payments, clearing the payment and then information the bank or financial institution. Although it may seem like an option that is unnecessary, because the clearing house personnel take care of the clearing of the ACH payments, the payment is significantly less money than a wire transfer. The ACH payments are usually one flat rate of around .25 cents per payment. ACH payments are also more convenient as they can be automated. The only downside that an ACH payment has is the time period it takes to move the money. Wire transfers take a shorter time to transfer, while ACH payment can take up to three business days.
Time
ACH payments have the disadvantage in this category. Since they take a longer period of time to clear, it’s possible that the money that needs to be moved to the other bank account could be late. With wire transfers, the money gets there almost instantaneously, but you pay the price for fast.
Security, Cost and Convenience
In every other category, ACH payments seem to have the upper hand. ACH payments are more secure because they provide a verification of payment and payee. ACH payments cost significantly less than wire transfers (.25 cents versus up to $30 per payment). ACH payments can be automated, unlike wire services.
So which is better to use? If you are looking to transfer money quickly and don’t mind paying the price, then a wire transfer is the choice. If you are interested in saving money and being more secure using ACH payments is the best choice. If you are interested in using ACH or Wire payments within your accounting system, take a look at the services Piracle offers. Piracle is a software company based in Utah. They are committed to streamlining payment procedures and have many solutions for businesses to do just that. For mor