So, are wire transfer and ACH the one and the same thing with just a varying name? No, there are more than one difference between ACH and wire. Sure, both transactions make use of bank-to-bank payment methods when electronically sending money. Both are also used by people and businesses to send payments to suppliers, affiliates and vendors.
Automated Clearinghouse or ACH is an entire network of banks that process transactions in batches; this is entirely different from the Publishers Clearing House. Let’s say that someone enrolled in an automatic bill payment on a monthly basis, regardless if it’s payment for insurance or for credit cards, ACH transfers are used most of the time. Because of the fact that ACH transfers are processed by batch, transactions can take anywhere from a few hours to several days. Compared to wire transfers, ACH transfers charge less but the funds take longer to arrive at the receiver’s account. On an additional note, ACH is exclusive in the US and not available for payees located outside the United States.
Wire transfers are typically used to transfer funds directly from the sender to the receiver’s bank account; these transactions usually only require the routing and account number. Unlike the ACH, wire transfer is not limited when it comes to cross-border payments; basically, you can send payments to banks located outside the US. Even though wire transfers have regularly been used in transferring funds, there are a handful of drawbacks. One of these is the high transaction fee especially for high volumes. Numerous banks actually charge fees in double digits both for the sender and the receiver; imagine the charges for international transfers. The major drawback would be that senders can’t reverse erroneous transactions no matter what the case may be.