ACH vs EFT: What's the difference?

When setting up direct deposits or automating bill payments, you'll likely come across 2 acronyms: ACH and EFT. While they're often used interchangeably, they don't mean the same thing — and understanding the difference between ACH vs EFT can help you pick the right payment method every time.

In the modern financial landscape, speed and clarity are important. Whether you're an individual managing personal bills or a small business owner handling payroll, knowing how your money moves is the first step you can take toward better money management.

Read on to learn more. And, if you still have questions, explore our guide to money transfers.

This article is for informational purposes only and does not constitute financial or legal advice. Transfer speeds and fees may vary based on your specific bank and location.

What are EFT payments?

Electronic funds transfer (EFT) is an umbrella term that covers any transfer of money from one bank account to another that's processed electronically. Instead of using paper checks or physical cash, the transaction relies on digital networks to communicate instructions between financial institutions.

Because EFT is a broad category, it doesn't refer to a single specific technology. Instead, it describes a wide range of payment types that we use every day. If you've ever used a debit card at a shop or withdrawn money from an ATM, you've initiated an EFT.

Common examples of electronic funds transfers

The scope of EFT payments is vast. To understand why the term is so common, it helps to look at the different systems that fall under this category:

• Debit and credit card transactions: When you swipe or tap your card, the data is sent electronically to authorize the movement of money from your account to the merchant.
• ATM transactions: Deposits, withdrawals, and transfers made at a machine are all processed as EFTs.
• Wire transfers: These are high-speed, individual transfers often used for large sums of money, such as a down payment on a house.
• Phone payments: Using your smartphone to pay via a digital wallet is a form of electronic transfer.
• ACH payments: This is a specific type of EFT that uses the Automated Clearing House network.

What are ACH payments?

An ACH payment is a specific type of electronic transfer that moves through the Automated Clearing House network. This is a centralized financial network in the US used by banks and credit unions to send and receive batches of electronic payments.

The network is overseen by an organization called Nacha (formerly the National Automated Clearing House Association).

How Automated Clearing House transfers work

Unlike some other types of electronic funds transfers that are processed individually and in real-time, ACH transfers are gathered into groups, or batches. Banks collect all the ACH requests they receive throughout the business day and send them to the clearing house at set intervals.

This batching process is one reason why ACH transfers are generally very cost-effective. By processing many transactions at once, the cost per transaction is lowered for the financial institutions, and these savings are often passed on to the customer.

Types of electronic payments

There are 2 main categories of payments that occur within this network:

1. ACH direct deposits: These are 'push' payments where money is sent to a customer. The most common example is payroll, where an employer sends a salary directly into an employee's bank account. It's also used for government benefits and tax refunds.
2. ACH direct payments: These can be 'push' or 'pull' payments. For example, when you set up an automatic payment for your electricity bill, the utility company 'pulls' the money from your account each month via the ACH network.

ACH vs EFT: Understanding the relationship

The most important thing to remember when comparing ACH vs EFT is that ACH is a type of EFT. Every ACH payment is an EFT, but not every EFT is an ACH payment.

Think of it like vehicles: EFT is the motor vehicles category, while ACH is a saloon car. A wire transfer might be a sports car — faster but more expensive to run — while a debit card transaction is a motorcycle. They're all motor vehicles, but they serve different purposes and operate on different rules.

Understanding this distinction helps clarify why you might see both terms on your bank statement or in your business accounting software. When a provider asks if you want to pay via EFT, they're asking if you want to pay electronically. If they ask for your ACH details, they're being specific about the network they want to use.

Key differences in processing and speed

When comparing different types of electronic payments, speed and the method of processing are the most significant variables.

Batching vs real-time authorization

The main difference between an ACH transfer and other EFTs like a wire transfer or a card payment is how the instruction is handled:

• ACH processing: Because these are batched, they don't happen immediately. Standard ACH transfers typically take between 1–3 business days to settle. While same-day ACH is becoming more common, it still relies on specific processing windows throughout the day.
• Other EFT processing: Wire transfers and card payments are usually authorized in real-time. When you buy a coffee with a debit card, the bank checks your balance and authorizes the transaction in seconds.

For businesses, this difference is crucial. If you need to pay a vendor today to secure a delivery, a wire transfer is the better EFT choice. If you're paying 50 employees on a Friday, the cost savings of the ACH network make it the ideal option, provided you initiate the batch a few days in advance.

Cost considerations for electronic payments

The cost of moving money can vary significantly depending on the EFT method you choose.

• ACH costs: For individuals, sending or receiving an ACH transfer often costs nothing. For businesses, the cost per transaction is usually very low, often ranging from a few cents to a couple of dollars, depending on the volume.
• Wire transfer costs: Because wire transfers are handled individually and offer near-immediate settlement, they carry higher fees. In the US, it's common to see domestic wire fees between $10–50.
• Card fees: Merchants usually pay a percentage of each transaction to accept credit or debit cards, which is why some small businesses prefer ACH for larger invoices to avoid those percentage-based costs.

ACH vs wire transfer

A common point of confusion is the difference between an ACH payment and a wire transfer, as both are types of EFTs used to move money between accounts. Here's a quick comparison:

Because wire transfers are settled almost immediately, they're considered 'cleared' money. This makes them the standard for high-stakes transactions like real estate closings. ACH, on the other hand, is the workhorse of the US economy, handling billions of routine, smaller transactions with high efficiency.

Learn more about wire transfers.

Choosing the right payment method for your business

As a small business owner, your choice between different EFT payments depends on your priorities.

Choose ACH when:

• you're setting up a recurring payroll for employees
• you want to offer customers an easy way to pay monthly subscriptions
• you're paying regular vendors and a 2-day delay doesn't affect your operations
• you want to minimize transaction fees on large payments

Choose other EFTs (like wire or card) when:

• you need to move a large sum of money right away
• you're buying goods from a new supplier who requires guaranteed payment before shipping
• you're accepting payments at a physical point-of-sale where customers expect to use cards

Moving money with Revolut

Moving money should be simple, whether you're sending it across the street or across the globe. At Revolut, we've built a platform that takes the complexity out of ACH and EFT payments by providing a clear, intuitive app for all your payment needs.

For our US customers, we offer a range of ways to send and receive money. If you need to pay a bill or a friend, our ACH transfers are a reliable and cost-effective solution. If you need more speed, you can also explore our wire transfer options or send money immediately to other Revolut customers with Revolut-to-Revolut payments.

We provide clarity on every transaction. Before you hit Send, we show you exactly how much it'll cost and approximately when it'll arrive. There are no hidden charges, and you can track your money's journey in-app.

Want to send money overseas? Discover our international payment options.

How to sign up for Revolut and start sending money

Getting started with a modern way to manage your money is straightforward. Here's how to get started:

1. Download the app: Find the Revolut app on the App Store or Google Play.
2. Sign up for Revolut: Open the app and enter your phone number. You'll be prompted to provide some basic details and verify your identity with a photo of your ID.
3. Add money: You can add money to your account via a bank transfer from another institution, or by using a debit card.
4. Initiate a transfer: Head to the Payments tab. Tap the + symbol in the top-right corner, then choose Bank. Enter your recipient's details, including their account and routing number.
5. Choose your method: Select the transfer method that fits your needs. We'll show you the estimated arrival time and any applicable fees upfront.
6. Confirm and track: Review the details and tap Send. You can then follow your payment in real-time until it reaches its destination.

Exchange and global transfer fees, fair usage limits, and Terms and Conditions apply.