What is the Difference Between ACH & Wire Transfer?

What is the Difference Between ACH & Wire Transfer?

When researching your options for a payment system, you may have come across the choice of supporting ACH transactions but weren’t quite sure if they applied to your shop.

While ACH transactions make the most sense for merchants running eCommerce businesses, any merchant who conducts online transactions in any capacity could benefit from implementing ACH.

ACH stands for Automated Clearing House, and you can think of it like a check without the paper. If you’re enrolled in a direct deposit program or pay your bills with monthly auto-drafts, you’re already used to using ACH.

It’s a little wordy, but technically speaking:

ACH is a computer-based clearing and settlement facility established to process the exchange of electronic transactions between participating depository institutions.*

Every year, ACH transactions move upwards of $41 trillion dollars across 24 billion transactions.* With that in mind, it’s no surprise that ACH now represents a significant portion of the financial transaction market, and it is widely considered a safe and reliable option for both B2B & B2C transactions.

How ACH Compares to Other Transaction Methods

  • It processes transactions in batches instead of individually.
  • While ACH isn’t as fast as credit cards, transactions do move quickly. It usually takes around 24 hours for a transaction to transfer, and that speed is increasing every year.
  • There are two types of transactions available: direct deposits and direct payments.
  • Funds aren’t guaranteed, so withdrawals can “bounce” just like a check.
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Why Your Business Should Accept ACH Transactions

A.k.a. Why should I care as a business owner? Well, let’s start with the most direct motivator:

It’s the Cheapest Transaction Method

When running a business, you’ll notice that common transactions typically fall into three categories: ACH, Paper Check, and Credit/Debit cards, and ACH is cheaper by far.

Let’s do a bit math to demonstrate:

If you’re selling an item at a list price of $300, let’s consider the fees via each transaction method. It will never be uniform across the board, but let’s play along for this example.

Typical fees for each type are approximately:

  • Paper Check: $1.57*
  • Credit/Debit Card: $5.80  (1.9% x $300 fee + $0.10 transaction fee)*
  • ACH: $0.26 – $0.50 depending on assumed risk*.

In this example, the ACH isn’t even 10% of the card transaction projected cost. And keep in mind, this is just a single payment, so if your business is conducting even 100 of these transactions every few months, you could be saving around $500 year after year.

Click here to have our team examine your last payment statement and let you know how much you could save in processing fees.

ACH is Great for Subscription Services

If you offer any sort of recurring service or product (e.g. monthly coffee deliveries), then ACH transactions are a great option for you. Customers don’t have to worry about paying you every month since ACH supports auto-draft capabilities, and you don’t have to worry about spending time and energy tracking down payments. Plus, you’re likely to have fewer headaches since ACH transactions can only be disputed for three reasons: the charge was the wrong amount, it was authorized earlier than anticipated, or it wasn’t authorized at all. This reduces the payment hassles that typically accompany credit card transactions — especially when handling larger transaction amounts.

Preferred Funding

Banks process electronic payments first, which means your business will get paid faster by transacting via ACH. ACH transactions are usually processed the next day, and companies are improving that speed by the day.


With high profile credit breaches serving up harrowing reminders of the importance of cybersecurity and with financial fraud on the rise, it’s important to take the security of your customer’s financial assets seriously. The same information required for checks is required for ACH, but it’s all transferred over an encrypted network and doesn’t pass through multiple hands like a physical check does.

You should also make sure that the ACH provider you choose has stringent security measures in place to prevent information leaks.

Reduces Paper Waste

Supporting ACH reduces the need for paper checks, and this reduces paper waste while saving you time.

How to Set Up ACH for Your Business

Setting up ACH requires a bit of paperwork but isn’t all that difficult, and it is supported by most major payment processing services, including Tidal Commerce.

It’s possible that you’re already set up to accept ACH payments, but you’re just not taking advantage of that service offered by your payment processor. Your first step is to look into your existing provider and see if they offer it. Either way, it’s a smart decision to do a bit of shopping around when it comes to payment providers that offer ACH capabilities. There are a lot of options, and many payment processors fail to pass on sufficient savings to their customers.

Make sure you compare the offer your existing payment processor is giving you with a variety of businesses online. As represented in the scenario above, even a small rate change can have a large, compounding effect moving forward.

If you’d like to know exactly how much you could save by introducing ACH into your business process model, click here to have the Tidal Commerce team review your payment statements for free and offer suggestions on how to cut costs.

*Statistics & quotes found in this blog are via BottomLine, Wikipedia, & NACHA.

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