ACH vs. EFT payments | Authorize.net

Electronic Fund Transfers (EFT) and Automated Clearing House (ACH) are two terms that most business owners and consumers are aware of, but what’s the difference between the two?

Most consumers expect businesses to accept some forms of electronic payment methods for purchases or money transfers. In previous blogs, we discussed EFT payments and ACH payments for small businesses.

What’s the difference between ACH and EFT?

The difference between ACH and EFT can be relatively complex. ACH payments are a type of EFT payment, often through the medium of an eCheck, but this doesn’t explain the differences between the two.

An EFT payment describes any electronic transfer of funds from one account to another and covers several different types of transaction. An ACH is one type of EFT, but there can be a level of specificity added to help differentiate between the two.

There are two major differences between EFT and ACH which should be taken into consideration when deciding which payment methods your business should offer to customers.

Security of ACH payments

Thanks to ACH payments passing through the Automated Clearing House, where they are settled twice daily, there is an extra element of security involved with an ACH payment.

Speed of EFTs

As previously mentioned, the Automated Clearing House releases payments twice a day, meaning that an ACH payment is not an “immediate” payment in the same sense as many others. Most other EFT payments are much quicker than ACH payments and funds are released almost as soon as the payment has taken place.

Should my business accept EFT or ACH payments?

Choosing the right type for you and your business means considering which of the features provided by each are most important to you.

For example, if your business has a close eye on the amount of money in the bank at any one time, utilizing a quicker EFT payment method might be the right choice. This way funds can be moved almost instantaneously into your business bank account from the customer.

ACH vs. wire transfer

When considering payment method options, you might also consider accepting wire transfers. When we talk about EFT and ACH payments, we’re only really referring to ACH payments, as this is the most likely form of EFT payment to be used in this type of transfer.

EFT transfers and wire transfers are two of the most common ways that banks transfer funds. A wire transfer is a payment made between two bank accounts that’s handled on a one-to-one basis by a member of staff at a financial institution. This means the bank confirms that the sender has the funds available and then transfers the funds. Those funds will then move into the recipient’s bank account.

Wire payments are very similar to ACH payments, but they’re completed much quicker and can be almost instantaneous because they don’t pass through a third-party network like the Automated Clearing House. A downside can be that once a wire transfer is sent, the funds can’t be retrieved.

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