ACH vs EFT: What's the Difference and Which Is Better for Business Payments?

ACH and EFT often get used interchangeably in conversations about business payments, but they're not the same thing. ACH is one specific type of EFT (Electronic Funds Transfer), not a separate category. For most business payments, ACH is the better choice because it costs $0.15 to $3 per transaction versus $25 to $50 for wires.

This guide covers when to use ACH versus other EFT methods, how each processes payments, and what the 2026 fraud monitoring changes mean for finance teams.

What is ACH (Automated Clearing House)?

ACH is a batch-processing network that handles electronic transfers between U.S. bank accounts. According to NACHA, the governing body for the ACH Network, it processed 33.6 billion payments worth $86.2 trillion in 2024. Standard ACH payments settle in 1-3 business days, while Same Day ACH can complete within hours. Finance teams probably use ACH every week without thinking about it. It's how most companies process payroll and pay vendors.

What is EFT (Electronic Funds Transfer)?

EFT refers to electronic transfers of money between financial accounts without using paper instruments like checks. The category includes ACH payments, wire transfers, debit and credit card transactions, ATM withdrawals, and real-time payment networks. Think of it as the umbrella term for any electronic way money moves between accounts.

People use "ACH" and "EFT" interchangeably when talking about payments, but they actually describe different levels of the payment system. ACH is one specific type of EFT, not a separate category. Understanding this relationship helps evaluate payment options correctly. You're not choosing between ACH and EFT, you're choosing which type of EFT (ACH, wire, card, etc.) fits your needs.

ACH vs EFT: Key Differences

Understanding how ACH compares to other EFT methods helps choose the right payment type for each situation. When evaluating payment options, finance teams are choosing among different EFT methods like ACH, wire transfers, card payments, and real-time networks.

Scope and coverage differences

ACH is a specific payment network in the United States governed by NACHA Operating Rules, with defined processing schedules, transaction limits, and compliance requirements. EFT includes all electronic payment methods, from ACH to wire transfers to card transactions.

Speed and settlement timing across methods

Standard ACH settles in 1-3 business days because of batch processing. Same Day ACH offers three processing windows with submission deadlines at 10:30 AM ET, 2:45 PM ET, and 4:45 PM ET, meaning finance teams can initiate urgent payroll or vendor payments as late as mid-afternoon and still have same-day settlement. Wire transfers complete the same business day, while card payments authorize instantly (though settlement to the merchant happens later). Real-time payment networks like RTP transfer funds in seconds with immediate notification.

Fees and transaction limits for ACH vs other EFT methods

ACH transfers typically cost between $0.15 and $3.00 per transaction, with many business banks offering them free for account holders. Wire transfers cost $25 to $35 per domestic transaction. Credit card processing runs significantly higher at 1.5% to 3.5% of transaction value plus per-transaction fees.

For a company processing $100,000 in monthly vendor payments, switching from credit cards to ACH saves thousands annually in processing fees. That's budget that can fund other finance improvements or growth initiatives, and the improved cash flow timing from predictable ACH settlement helps with forecasting.

How ACH Payments Work

Let's break down how ACH actually processes payments so you can plan timing and troubleshoot issues before they happen.

Common ACH payment types for businesses

Most companies use two main types of ACH payments regularly. ACH Direct Deposit pushes money out, handling payroll to employees, payments to contractors, reimbursements to staff, and invoice payments to vendors. ACH Direct Payment pulls money in, collecting subscription fees from customers, processing recurring invoices, and receiving payments from clients.

For a 200-employee company, that might mean processing 400 ACH Direct Deposits per month for bi-weekly payroll plus dozens of ACH Direct Payments from recurring customers. Understanding the difference between Direct Deposit and Direct Payment matters less than understanding who controls the transaction, which brings us to credits versus debits.

ACH credit vs ACH debit and what your business controls

Here's the practical difference that matters for finance operations: with ACH credits, the business pushes money from its account to someone else's account and controls when and how much. ACH debits work in reverse. The business pulls money from someone else's account into its account, but only after they've authorized the debit. This authorization requirement isn't optional, it's a foundational NACHA compliance requirement built into every ACH debit transaction.

What happens when you send an ACH payment

When a business initiates an ACH payment, here's what unfolds:

• Your bank batches the payment: The bank (called the ODFI or Originating Depository Financial Institution) collects payment instructions throughout the day and batches them with other businesses' payments.
• The batch goes to an ACH Operator: Your bank sends this batched file to an ACH Operator, either the Federal Reserve or The Clearing House.
• Processing and routing happen: The ACH Operator processes, sorts, and routes transactions to the appropriate receiving banks.
• The receiving bank settles: The receiving bank (RDFI or Receiving Depository Financial Institution) credits or debits the final recipient's account.

This batch processing approach is why ACH takes 1-3 business days but costs dramatically less than individual wire transfers.

How EFT Payments Work (Beyond ACH)

Not every electronic payment uses the ACH network, and understanding the alternatives helps choose the right method for each situation.

Main EFT types and how they differ from ACH

Wire transfers process individually through networks like Fedwire or SWIFT. Domestic wires sent via Fedwire typically settle the same business day if initiated before bank cutoff times, while international wires sent via SWIFT commonly take 1 to 5 business days. Card payments run through card networks with instant authorization but delayed merchant settlement. Real-time payment networks like RTP move funds in seconds with immediate finality. The key difference from ACH is the processing approach: these methods handle transactions individually or in real-time rather than batching them overnight.

How wire transfers and RTP networks process payments

Domestic wire transfers use Fedwire and process each transaction individually in near real time during operating hours. International wire transfers typically use SWIFT, but settlement often takes 1 to 5 business days due to correspondent banks. The Clearing House's RTP network provides instant settlement 24/7/365, with funds moving in seconds. Both contrast with ACH's batch-and-settle approach where payments join hundreds of others in scheduled processing windows.

Speed, fees, and limits comparison across EFT methods

ACH takes 1-3 business days and costs $0.15 to $3.00 per transaction. Wire transfers settle on the same business day and cost $25 to $50 for domestic transfers. RTP settles in seconds with varying costs. Card payments authorize instantly and charge 1.5% to 3.5% of transaction value.

ACH vs EFT vs Wire Transfers

Wire transfers are one type of EFT, just like ACH. They're electronic payments between bank accounts, but the distinction in processing is significant. Wires process individually and immediately rather than in batches, creating different cost and speed characteristics.

ACH vs wire transfers for speed, cost, and risk

ACH transfers take 1-3 business days while wires can move funds the same business day. ACH costs $0.15 to $3.00 per transaction while wires cost $25 to $50. Spend management platforms note that ACH payments can be reversed in case of error, while wire transfers are generally irreversible once sent.

For routine business payments where timing can be controlled, ACH's low cost and adequate speed make it the default choice. For urgent payments where immediate confirmation is needed, wires justify their higher cost.

When a wire transfer makes more sense than ACH

Wire transfers make sense in specific scenarios: when making a payment over $1 million (exceeding the Same Day ACH limit), for international payments to countries not supported by international ACH, for first-time payments to new vendors when immediate proof of payment is needed, and in time-critical situations avoiding late fees or service interruptions. Outside these specific scenarios, ACH's substantial cost savings make it the better choice.

Benefits of ACH for Business Payments

We've seen finance teams at companies from 50 to 500 employees realize significant advantages after switching from manual check processing or expensive wire transfers to ACH. Three areas consistently move the needle:

• Cost savings on high-volume payments: ACH costs $0.15 to $3.00 per transaction compared to $25 to $50 for wire transfers. For a company processing 200 vendor payments monthly, ACH saves $4,000 to $9,000 annually. That's budget that can fund other finance improvements.
• Automation that reduces manual work: ACH integrates with modern spend management platforms to automate payroll, recurring vendor payments, and subscription billing. Finance teams typically reclaim 15 to 20 hours per month after automating routine ACH payments.
• Error recovery built into the network: Unlike wire transfers that are generally irreversible once sent, ACH allows reversals for errors through NACHA's return processes. This safety net matters when a payment amount is wrong or goes to the wrong account. ACH provides recovery options that wires don't.

These benefits compound as companies grow. A 100-employee company processing bi-weekly payroll saves both money and time compared to check printing or wire transfers, while also improving the employee experience with reliable direct deposit.

Choosing Between ACH and Other EFT Options

Once you understand how each payment method works, the decision becomes straightforward. The choice comes down to timing, cost, and where the payment is going. Here's how to match the payment method to the situation.

When to use ACH for business payments

ACH works best for any payment where timing can be planned in advance and cost matters more than immediate settlement:

• Payroll and contractor payments: When payday is Friday, initiating ACH on Tuesday or Wednesday works perfectly. For companies with hundreds of employees, using ACH instead of wire transfers saves substantial amounts annually.
• Recurring vendor payments: Rent, utilities, subscriptions, and regular vendor payments work well with ACH. B2B invoice payments under $1 million increasingly use ACH rather than checks or wires.
• Customer subscription billing: Recurring collections cost dramatically less than credit card processing. For SaaS companies managing subscription revenue across hundreds of customers, this difference compounds quickly.

Spend management platforms that integrate with your accounting software automate this process by handling ACH vendor payments and eliminating manual data entry while maintaining cost advantages.

When to use other EFT methods (cards, wallets, wires)

Card payments make sense for customer-facing transactions where convenience drives sales and the business is willing to pay 1.5% to 3.5% processing fees for the incremental revenue. Wire transfers justify their cost when making urgent payments where timing matters more than fees, sending amounts over $1 million that exceed Same Day ACH limits, or making international payments to countries not supported by international ACH.

Payment factors that matter most

According to the 2024 Federal Reserve Business Payments Study, speed is the primary consideration impacting businesses' payment method choice. Payment size matters because of transaction limits. Same Day ACH supports up to $1 million per transaction. Geography determines which methods work: ACH for U.S. payments, international ACH for 40+ supported countries, and wire transfers for everywhere else.

Security, Compliance, and Risk Considerations

New fraud monitoring rules and security requirements are changing how businesses handle ACH and other EFT payments. Here's what finance teams need to know about compliance and protection.

ACH network rules and protections (NACHA framework, reversals)

According to NACHA's announcement, new rules create mandatory fraud compliance responsibilities for all organizations sending ACH payments. Finance teams need to establish risk-based fraud detection processes reasonably intended to identify potential fraudulent transactions, document procedures for handling payment information update requests, and review fraud detection effectiveness annually.

Implementation deadlines vary by transaction volume. March 20, 2026 is the deadline for corporate end users that send 6 million ACH transactions or more annually, and June 20, 2026 is the deadline for all corporate end users that send any ACH transactions annually.

Consumer protections and regulations for EFTs in general

Many consumer EFT methods operate under federal protection through the Electronic Funds Transfer Act (Regulation E), which establishes rights, liabilities, and responsibilities for participants in covered electronic fund transfer systems. For consumer transactions, Regulation E provides liability limits for unauthorized transactions ($50 if reported within 2 business days, $500 if reported within 60 days of statement), mandatory error resolution procedures, and specific dispute rights for ACH debits from consumer accounts.

Common fraud and mitigation strategies

Three practices catch most payment fraud before it happens:

• Verify payment information changes via phone call: When you receive requests to update vendor banking details, calling the vendor using a known phone number from your records prevents most payment diversion fraud. Don't use contact information provided in the email requesting the change.
• Implement dual authorization for high-value payments: Requiring two approvers for payments over $10,000 to $25,000 depending on company size creates friction for unusually large transactions. The threshold should scale with typical payment amounts.
• Maintain a verified vendor contact database: Keeping a separate, regularly updated database of legitimate vendor contacts that's used exclusively for payment verification helps your team recognize red flags like urgent payment requests, slight email address variations, or unusual payment timing.

Building these practices into payment workflows helps meet compliance requirements while protecting against fraud.

Frequently asked questions

Is ACH a type of EFT or are they the same thing?

ACH is one type of EFT, not a separate thing. EFT is the umbrella term for all electronic transfers between bank accounts, including ACH, wire transfers, and card payments. When vendors say they support EFT payments, ask which specific methods they actually handle since that category covers everything from $0.15 ACH transfers to $50 wire transfers.

Is ACH safer or cheaper than other EFT methods like wires or card payments?

ACH is dramatically cheaper at $0.15 to $3.00 per transaction versus $25 to $50 for wires or 1.5% to 3.5% for card processing. On safety, ACH allows reversals if you catch errors quickly, while wire transfers are generally irreversible once sent. Both are secure networks, but ACH gives you more recovery options if something goes wrong.

Can ACH or EFT be used for international payments?

ACH works for payments to more than 40 countries including Canada, the UK, Europe, and Australia at around $10 per transaction. For countries outside this network or when you need same-day international settlement, wire transfers provide coverage to 180+ countries through SWIFT. Use ACH for routine international payments to supported countries and wires for everything else.

Which is better for my business: ACH, wire transfer, or other EFT options?

ACH works best as the default for most business payments like payroll, recurring vendors, and customer collections because of the cost savings. Wire transfers make sense when you need urgent same-day settlement, you're sending over $1 million, or you're paying internationally to unsupported countries. Card payments justify their higher fees mainly for customer-facing transactions where the convenience drives sales you wouldn't otherwise get.