There are many types of electronic funds transfer options available, and many people wonder how to pick one? Two of the most popular options are ACH and Wire Transfer. 

What is ACH payment?

First, let's talk about ACH, ACH stands for Automatic Clearing House payments which are made directly person-to-person or by direct deposit. An ACH payment is held at an approved financial institution or bank for two to three days before it clears. Some banks are working on doing that a bit quicker and having it turn around in one day.

Benefits of ACH

• The benefits of ACH include minimal fees or sometimes free.
• You can stop or reverse the payment at any time if it's erroneous.
• And you can easily detect fraud when you review your settlement statements or activity reports.

Drawbacks of ACH

• The drawbacks are that it can take two to three days to clear.
• And ACH can only be used domestically in the United States.

What is a Wire Transfer?

Next, let's talk about wire transfers. A wire transfer can be initiated by a bank via a network like Swift or a Fed wire. This is not the case of the transfer of funds within your own bank.

Wire Transfers are fund transfers that are made between the accounts which are associated with the countries' central fund settlement authority. They are monitored by the countries' central bank, and they run on a specific standard set by them. All the wire transfers are to be processed under their regulations and Guidelines.

Benefits of Wire Transfers

• A wire payment can be made inside the United States or internationally, unlike an ACH payment.
• It's quick and takes only a couple hours before the receiving party gets the money.

Drawbacks of Wire Transfers

• The drawbacks of wire are high fees. It can cost 25 to 40 dollars to initiate the payment, and then someone on the receiving end might have to pay an additional 10 dollars or so just to receive the money.
• Besides, wire transfers are susceptible to fraud or scams, so it's vital to verify that you know the party receiving the payment has given you the correct bank information.
• And thirdly, wire transfers cannot be reversed once the money is sent; it cannot be undone.

ACH or Wire?

If you're looking to make a payment domestically (within the US) that it's not time-sensitive, inexpensive, and reversible, go with ACH. If you need to make a payment that's quick and overseas, you can select the wire. However, remember the fees can be higher.