Transferring money over long distances to relatives or even to pay for a service that was offered can be effected by an Automated Clearing House (ACH) transactions or a wire transfer. They are both secure and have been by financial institutions for many years to these services serve its customers. This article will cover the main difference of wire and ACH transactions.
What is a wire money transfer?
These are monetary transactions that take place between two financial institutions for example, between banks or wire money transfer services. Both the receiver and the sender ought to have an account with the bank. As for the wire transfer services, the sender and the receiver do not necessarily need proper identification to transact money. Transactions are processed individually and the time taken for processing can be as little as fifteen minutes.
What is an ACH money transfer?
ACH transactions in this system pass through a clearing house where they are processed as a group or a batch. Due to this reason, time taken for processing is between one to three business days. The system is completely automated means that both the sender and the receiver do not require to be physically at the bank of wire money transfer services offices. This service is majorly used to make online payments, direct payroll deposit, and person to person payments.
Advantages of ACH transfer
Security: Although both are quite secure, wire transfer services do not require proper verification of the sender and the buyer. ACH money transfer on the other hand, uses credit cards which are difficult to forge and are traceable. ACH transfers also require that both parties approve the fund transfer before money is sent. This eliminates any chances of the receiver being scammed for goods and services bought especially because he\she can ask for a refund.
Cost: The cost of conducting a wire money transfer is usually high. This is because financial institutions get a certain commission from the transfer. ACH transactions on the other hand, require a small or no amount of transaction fee.