Speed and security are two factors most important to businesses looking for a reliable payment method.
Whether your business is looking for a highly secure payment method or the ability to transfer funds immediately, consider looking at ACH payments or wire transfers.
Both of these electronic payment methods utilize bank account or personal information, which can reduce processing costs. But what are the differences between these two payment methods?
What are ACH Payments?
Using ACH to process payments or funds is simple and secure. ACH payments are processed through the Automated Clearing House network and involve transferring money from one bank account to another.
Since money is transferred directly to and from bank accounts, fees associated with other payment methods such as credit card processing do not apply. Businesses can initiate automatic payments using ACH Debit transactions or one-time authorized payments using ACH Credit transactions.
ACH transfers are considered to be one of the safest methods of money transfer in the United States.
What are Wire Transfers?
Sending money through wire transfer is one of the fastest payment methods available.
Wire transfers involve moving money from one group to another, whether both parties are using bank accounts or one person is sending money directly to another using a third-party service.
For bank wire transfers, your business never needs to worry about receiving a bounced check or money from an account with insufficient funds, since the bank verifies this information before initiating the wire transfer.
Speed and Security of Transferring Funds
To process payments using ACH transfer, both participants must have access to a bank account.
This method of bank information verification enhances the security of ACH payment processing and helps prevent fraud. However, this can mean longer fund transfer times; it can take up to several business days for ACH payments to transfer funds from one account to another.
Money sent through a wire transfer, on the other hand, is transferred almost immediately. Non-bank wire transfers do not require bank accounts; one individual can send money directly to another using a service provider who may charge an additional fee for same-day transfers.
For bank wire transfers, money is verified and sent immediately to the recipient’s account.
Controlling Funds and Information During Transfer
With ACH payment processing, your business can initiate recurring payments to vendors, saving your staff time and energy tracking and manually sending payments.
However, if your account has insufficient funds, an automatic payment can lead to bank fees and delayed payments. Most AP departments, however, keep a close eye on business accounts to prevent this from happening.
You can reverse an ACH transaction if you find an error in your payment or discover fraudulent charges, which helps keeps your funds safe and secure.
Automatic payments can require more diligent account management but can simplify AP or invoice payment processes. For businesses paying the same vendor many times each month, ACH automatic payments can be a great way to save time and avoid forgetting payments.
With wire transfers, you do have control over your payment amount and are not necessarily required to provide any secure bank information.
However, the downside to wire transfers is that once you have sent the funds, there is no way to retrieve them. This can be problematic if you make an error with the payment amount or recipient.
ACH vs. Wire Transfers at a Glance
ACH payment processing is a reliable way to transfer funds from your business bank account to vendors or other accounts and provides you with a secure way to verify payments and reverse fraudulent charges.
Wire transfers are handy when you need to send money to another bank account or person quickly. Fund transfers happen immediately but cannot be reversed, which requires you to make sure the payment information you have is accurate, and you have verified the payee.
Non-bank wire transfer options allow you to send payment without disclosing sensitive bank information, but this is often at a higher cost.
For secure and fast payment options, both ACH and Wire Transfers fit your business needs. ACH payments are backed by a reliable institution and allow you to maintain control over your funds even after you send the payment.
Wire transfers can save your business time, but those funds cannot be reversed or tracked with the same amount of detail as ACH transfers. Though Wire Transfers provide you with a speedy transfer, ACH’s security can offer peace of mind when handling your business transactions.