ACH vs. Wire Transfers

As the use of paper checks continues to decline, electronic transfers have experienced dramatic growth. The two most common methods of electronic transfers are ACH and wire transfers. What’s the difference between the two, and when is one a better option than the other? Both take place primarily in a checking account. ACH transfers are routinely used by just about anyone with a bank account, especially those who take advantage of online and mobile banking. By contrast, wire transfers are used mainly for more complicated transactions. But even they can often be accomplished using online or mobile banking.

ACH vs wire transfer: Overview

The table below summarizes the primary differences between ACH and wire transfers:

ACH transfers

An automated clearinghouse, or ACH, transfer is an electronic transfer of funds made between financial institutions. It takes place through the ACH network and is a common transfer method available at banks and credit unions. Though ACH transfers can involve different financial accounts, they are most commonly used with a checking account.

How does ACH work?

Though ACH transfers primarily originate with banks and credit unions, they can terminate at merchants, service providers and, of course, other financial institutions. For example, you may use an ACH transfer to pay a utility bill, make a loan payment, pay your taxes, transfer money to another financial account, or send money to an individual. An ACH can be set up to make recurring payments, such as monthly loan payments, or a single, one-time payment. It’s even possible to set up batch transfers, as employers commonly do with payroll checks. To initiate an ACH (or recurring transfers), you will generally need to provide your bank routing number and personal bank account number to the receiving party. This can typically be done online when you are paying a bill on a vendor’s website. An individual or an organization can initiate an ACH transfer through a financial institution. The transfer is typically initiated online, making it fast and convenient. Once initiated, the payment will go through a clearing house, then on to the financial institution of the receiving party. The ACH network is governed by a nongovernment organization known as Nacha, and covers virtually all banks and credit unions in the U.S.

Which types of transfers can you do via ACH?

An ACH is not a single type of transfer but actually covers a wide range of transactions. The most common ACH is the transfer of funds between financial institutions. But it also encompasses other transfers, such as online bill payments, paycheck direct deposits, and person-to-person transfers. The latter encompasses popular payment systems, such as PayPal, CashApp, and Zelle.

Costs	From free to 5%, depending on transfer type	Free to 1.75%
Max transaction limit	Up to $60,000 per transaction for verified accounts	Up to $1,000 per 30-day period for unverified accounts, may be higher for verified users
# countries	200+	2
	View Offer	View Offer

As the use of electronic transfers has grown, ACH transfers now fill the role once covered by paper checks and even cash payments. In the second quarter of 2023, ACH transfers totaled $20 trillion, according to Nacha. That figure includes $1.2 trillion in same-day ACH transfers, representing an increase of nearly 52% over the same period a year earlier.

Wire transfers

Similar to an ACH, wire transfers are the transfer of funds between financial institutions. Wire transfers are commonly separated into two primary types, domestic and international. A domestic transfer is one that occurs between two financial institutions located in the same country. An international wire transfer is the movement of funds from a financial institution in one country to a financial institution in another.

While banks and credit unions commonly offer wire transfer capabilities for domestic transfers, the practice is less common with international wire transfers. International transfers are primarily handled by large, money center banks. Regional banks may offer international transfers through a correspondent relationship with a money center bank, while small banks and credit unions may not offer them at all.

If you do not have a bank account, or if your bank or credit union does not provide international wire transfers, you can use a non-bank service, like Western Union. It has more than 57,000 agents available across the U.S. and can complete transfers to more than 200 countries and territories.

How do wire transfers work?

When initiating a wire transfer, you’ll need to provide a series of information to your financial institution (if you are sending the wire), or to the sender of the wire if you will be the receiving party. The information can be provided at a bank branch, through online banking, or even on a mobile banking app. Like an ACH, a wire transfer is most likely to involve a checking account, though it can be received in other types of financial accounts. If you will be receiving a wire you’ll typically need to provide the sender with the following information:

• The name of your financial institution.
• Your financial institution’s address.
• The owner of the account, which is usually the sender.
• Your account number.
• The financial institution’s routing number. If you will be the wire sender, you’ll need to provide the following:
• Your name and the receiving party’s name.
• The receiver’s address and phone number.
• The receiver’s financial institution, routing number, and personal account number.
• The amount of the payment to be sent. If the wire will be international you’ll also need to include the SWIFT BIC number, which identifies the bank receiving the funds.

Which types of transfers can you do via wire transfers?

A wire transfer can be done for many of the same transfers as an ACH. That includes bill payments, person-to-person transfers—and especially international transfers, which cannot be done via ACH.

When to transfer money with a wire transfer

Wire transfers work best for transfers involving either large amounts of cash or for international transfers, which also involve foreign exchange rates. Wire transfers are commonly required for major transactions. A primary example is real estate transactions. Because they involve large amounts of money, funds provided by the mortgage lender are wired to the closing agent.

Fees: ACH vs. wire transfers at banks

The table below displays the fees charged by several banks for both ACH and wire transfers. While ACH transfers are typically free of charge, wire transfers fees can vary between $0 and $50 per transaction. The wide disparity in wire transfer fees can be attributed to different account types, as well as higher fee structures for international wires compared to domestic wires.

TIME Stamp: ACHs are more common for everyday transfers

ACH and wire transfers should be seen as complementing transfer methods, rather than competitors. In most situations, and for most people, ACH will be the preferred transfer method. It’s quick, easy, and extremely common. Wire transfers should be reserved for special circumstances, such as international transfers or the movement of very large amounts of money. That’s because they are a bit more complicated to do, involve fees, and are not available for international transfers by most banks and credit unions. Now that you know the difference between the two, you’ll be better able to judge which transfer method to use and when.

Frequently asked questions (FAQs)

Is PayPal a wire transfer?

No. PayPal uses a direct transfer method between PayPal account holders that requires each party’s email address. However, if you are a U.S. resident you can use an ACH to transfer funds from your bank account into your PayPal account. Because it is a payment transfer system, PayPal can be used to transfer funds to and from parties in different countries. It’s one of the fastest and easiest ways to accomplish cross-border transfers, but the fees can be high at over 5%.

Which payment tools allow for wire transfers?

If your bank or credit union offers wire transfers, and nearly all do, you should be able to arrange the transfer using either the online banking platform or mobile banking app. However, most financial institutions do not accommodate international wire transfers. Other services you can use for wire transfers, both foreign and domestic, include Western Union and MoneyGram.