ACH vs EFT [How to Send Money 101] - GlobalBanks (2024)

ACH vs EFT is a common comparison that arises when trying to decide how to send transfers.

In this article, we’ll explain what ACH and EFT are and describe how they compare to one another.

This article is part of our free series on how to send money, including answers to questions like what is a money order and navigating options for transferring funds abroad.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

1. ACH vs EFT
2. Electronic Funds Transfer
3. Automated Clearing House (ACH)
4. Frequently Asked Questions
5. Ready to Explore Your Options?

ACH vs EFT

The main difference between ACH and EFT is that ACH refers to a specific type of electronic transfer while EFT refers to the broader category of electronic funds transfers. In other words, ACH is an EFT, and EFT can refer to an ACH, wire transfers, electronic checks, and other forms of internet-based transfers.

Electronic Funds Transfer

Electronic funds transfer refers to sending funds from one bank account to another via an electronic (or digital) transfer method. There are many different types of electronic transfers available, ranging from Automated Clearance House (ACH) transfers, wire transfers, electronic checks, online payment systems, and even debit and credit card transactions.

How Do EFT Payments Work?

Electronic funds transfer works by sending the information for the payment from the paying bank to the recipient bank. Depending on the sending and receiving banks and the method of electronic funds transfer used, the number and specific counterparties involved in the transaction can range.

As we’ll explain below when sending an ACH the counterparty between the banks is the clearing house. However, when sending electronic funds transfers through other methods (such as a credit card), you can have many counterparties including a payment processor, payment gateway, an issuing bank for the card, the receiving bank, and a card network.

With this in mind, when exploring ACH vs EFT it’s important to note that certain EFT options involve far more counterparties than others. And, ACH involves very few, since it is a direct transfer to an account at another bank.

Automated Clearing House (ACH)

Automated Clearing House (ACH) refers to sending a financial transaction through an electronic clearing and settlement system. In short, an Automated Clearing House transfer is an electronic funds transfer that is sent between financial institutions, including banks and credit unions.

How Do ACH Transfers Work?

ACH transfers work by sending information from the paying bank to the clearing house, which then sends information to the receiving bank. In other words, there are only three financial parties involved, including the two banks and the clearing house. With this in mind, compared to other forms of electronic funds transfers, ACH is very straightforward and timely.

Do You Want Our Free Non-Resident Banking Guide?

Sign up here to receive our Free Non-Resident Banking Starter Guide and weekly updates on the best account opening options available:

Frequently Asked Questions

Below are three of the most common questions that we receive from people looking into ACH vs EFT. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.

Is EFT the Same as Direct Deposit?

The main difference between EFT and direct deposit is that EFT refers to the broad category of electronic funds transfers while direct deposit refers to a specific type of electronic funds transfer.

What Are the Four Types of EFT?

The four main types of EFTs are Automated Clearing House (ACH) transfers, wire transfers, online payment systems, and credit card payments. Depending on where you are located in the world it is also possible that there are other options to choose from or variations of these options available.

Is an EFT a Wire Transfer?

The main difference between EFT and a wire transfer is that EFT refers to the broad category of electronic funds transfers while a wire transfer refers to a specific type of electronic funds transfer.

Ready to Explore Your Options?

If you would like assistance navigating your banking options at home or abroad, we can help.

You can access GlobalBanks IQ, our international banking intelligence platform, in just a few clicks. Unlock our bank database, individual bank profiles, account opening strategies and reports, banker scripts, and more.

But, if you want a 100% personalized account opening service that taps into our team’s expertise and provides direct banker introductions, you can get started with GlobalBanks Insider.

Of course, if you have any questions, please contact us directly.