ACH vs. EFT: What’s the Difference? (2024)

FAQs

What is the difference between EFT and ACH? ›

The difference between ACH and EFT is that EFT (or, electronic funds transfer) is a general term that refers to all types of electronic payments whereas ACH (short for Automated Clearing House) refers to one specific type of electronic payment.

Both ACH and wire transfers work in a similar way, but with different timelines and rules. Wire transfers are direct, generally immediate transfers between two financial institutions. ACH transfers, meanwhile, pass through the Automated Clearing House, and can take up to a few business days.

The ACH system is a way to transfer money between bank accounts, rather than going through card networks or using wire transfers, paper checks, or cash. The Automated Clearing House network is a US-based network that also covers the U. S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.

If you initiate a transfer after the scheduled time, you may experience delays. This could result in missing payment deadlines and paying penalty fees. It also means that ACH transfers may not be appropriate for emergency or time-sensitive transactions.

Electronic funds transfer (EFT) is a catch-all term that includes a wide variety of electronic payments, like credit card payments, ACH payments, and wire transfers.

An ACH is an electronic fund transfer made between banks and credit unions across what is called the Automated Clearing House network. ACH is used for all kinds of fund transfer transactions, including direct deposit of paychecks and monthly debits for routine payments.

All banks in the United States can use ACH, as all that's needed to receive an ACH transfer is a valid bank account and routing number.

EFT (Electronic Funds Transfer) - is a general banking system in which transactions, such as deposits and bill payments, are made through computer databases and electronic files. This is often referred to as a direct deposit.

ACH transfers are a bit safer for senders. Unlike most wire transfers, funds can be reversed in cases of fraud or payment error. The criteria for reversals is usually determined by banks. Wire transfers have little disadvantage for the recipient.

ACH transfers are a type of EFT, and EFTs include ACH transfers but are not limited to them. While wire transfers are processed individually in real time, ACH transfers are settled in batches.

What are the two types of ACH payments? ›

There are two types of ACH payments. ACH debit transactions involve money being “pulled” from your account. ACH credit transactions let you “push” money to different banks (either your own or to others).

Basically, all Zelle payments are (instant) ACH payments but not all ACH payments are Zelle payments. The primary difference between Zelle and regular ACH payments is related to speed—whereas a standard ACH payment can take 2-5 days to clear, Zelle payments tend to clear in minutes.

Security. Another advantage ACH payments have is that they're more secure than wire transfers and card payments. This is because ACH payments must pass through clearinghouses that enforce strict regulations.

ACH payments are not considered cash for the purpose of reporting on Form 8300.

Apart from the Bank of America's $1k a day ACH transaction limit, most offer higher transaction limits. On average, most banks have slightly over $5k daily ACH transaction limits, usually around $10k a month.

Essentially, EFT (electronic fund transfer) is used to move money from one account to another. The transaction is completed electronically, and the two accounts can be at the same financial institution or different financial institutions.

There is no fee to use the EFT service, although your financial institution may charge transaction fees.

The maximum amount you can send by Interac e-Transfer® is $4,000 per 24-hour period. The maximum amount you can send to another National Bank client is $3,000 per 24-hour period. The maximum amount you can send by international transfer online is $10,000 per transfer.