Key Difference:  Automated Clearing House (ACH) is an electronic network that is used for financial transactions. It processes large volumes of transactions in batches, therefore time of delivery is not instant. On the other hand, wire network is basically a network through which funds can be transferred immediately from one bank account to the other account.

ACH and wire transfer both refers to the process of transferring from one institution or person to the other institution or the person. Both are extensively used in banking and thus sometimes can be difficult to differentiate between them. However, this article will explain the relevant and basic details so that next time you hear words ACH and wire transfer; you get the real picture of both.

ACH of America was created in 1970. In 1974 National ACH Association arose from regional ACH organizations and rules were established to facilitate the nationwide clearing of ACH payments. This network is a batch processing, store and forward system. Many countries have a national automated clearing house. Apart from few differences, the basic processing remains the same.

Transactions via ACH are received by any financial institutions are generally stored and then processed later in batches. The payments are not sent individually. These ACH transactions are then accumulated and sorted depending upon the destination for transmission during a predetermined period. It avoids paper checks, and thus ACH transactions are transmitted electronically. Bills can also be scheduled to be paid on time.

The payments covered under ACH are:-

Direct deposit of payroll

Direct deposit of government benefits like social security

Payment of consumer bills as loans etc,

E-commerce related payments

Business to business payments etc,

Automated Clearing House (ACH) system is known by the name of Electronic Clearing Service (ECS) in India. ECS is currently available in around 89 centers in India. Reserve Bank of India operates this service in India. With the introduction of NACH or National Electronic Clearing Service (NECS) by Reserve Bank of India, the reach of the system has been further extended.

We generally make payments via our credit or debit cards. We purchase any thing and

then just provide our card to the concerned person of payment section. This person swipes the card and the payment is made at that particular instant. Have you ever wondered that what is the technical name of such payment transaction. The answer is – point of sale wire transfer. Apart from it, it is used to transfer a large amount of money from one account to the other. The transfer is instant and thus the fees are higher. However, for point of sale wire transfer, the transaction can be free or can charge a little amount.

Let us explain it in details. A wire network is basically a network through which funds can be transferred form one bank account to the other. The transfer is electronically and thus cannot be seen in practical. The transfer in wire transfers is completely operated by the bank. The earlier version of this kind of transfer was used by the telegraph companies and was used to transfer money order from one office to the other. In European countries, wire transfer is also known as ‘giro’.

Wire transfers authorize the bank on behalf of customer to wire accounts and transfer in other accounts. It is a quick method and thus has been adopted world- wide. It is administered by the global administer. This administer monitors the transfers through various networks. It is regarded as the most convenient way of making payments like personal account management, credit and balance transfers, paying telephone bills, paying of internet bills etc.

ACH processes the transactions in batches and therefore is not instant as  wire transfers. The ACH charges are more than,  comparatively to nil or very low fees for the service of wire transfer, therefore if the transaction is not be made instantly then people prefer ACH. However, the choice remains with the individual according to the suitability.

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