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Comparing Different Bank Money Transfer Types: ACH vs. Wire vs. Electronic Transfer vs. Direct Deposit vs. eCheck vs. ACH Check Conversions

Comparing Different Bank Money Transfer Types: ACH vs. Wire vs. Electronic Transfer vs. Direct Deposit vs. eCheck vs. ACH Check Conversions

In this article, you will find the pros and cons of ACH transfers, wire transfers, electronic transfers, direct deposits, echecks and ACH check conversions. After the pros and cons section, you will find a section that highlights the best and worst sides of each money transfer method when compared with all the others on this list. For example, a wire transfer is faster than all the other methods listed on this article, but it is also (usually) the most expensive. The pros and cons listed below may help you understand a little more about money transfers, and they may help you decide which type of money transfer you would prefer to use in the future.


ACH Transfer


Automated Clearing House payments are electronic payments that can be made as single payments or as frequent and recurring payments. In other countries, an ACH transfer may be called a direct debit or may simply be called an electronic transfer.

Pros

  • ACH transfers are almost always cheaper than things such as wire transfers
  • You may pay numerous people and employees routinely and cheaply
  • Set up recurring payments so you do not have to do it manually
  • Some companies offer discounts for paying via recurring ACH transfer
  • You don’t have the remember to make your payments manually
  • There is no need to write or send checks
  • Issues such as lost checks and forged checks become a thing of the past
  • Tracking your payments is a little easier
  • More environmentally friendly than using checks

Cons

  • An ACH transfer will take at least one night
  • Some ACH transfers take four to seven business days
  • Paying people overseas with ACH is very tricky and/or not possible
  • You have to notice billing errors quickly or they may be repeated
  • Some people forget about their recurring transfers and pay more than they should
  • You may overdraw your account if you don’t have the money in your account when the transfer occurs

Wire Transfer


A wire transfer is where the computers connect from the senders account directly to the recipient’s account. There is no middleman in this case, it is a direct transfer and usually happens very quickly.

Pros

  • It is one of the fastest ways of moving money to and from accounts
  • You may send money worldwide with wire transfers
  • It is a fairly safe method of moving money
  • You may send money overseas very quickly
  • They are very easy to execute

Cons

  • A wire transfer is very hard to reverse
  • Some banks will charge you to receive wire transfers
  • Transferring money overseas is usually expensive
  • Some banks don’t offer overseas wire transfers
  • Banks and money companies like to charge fees for wire transfers

Electronic Transfer


An electronic transfer is any type of digital money transfer, but it usually refers to things such as Bill Pay, direct debit, bank transfer, internal transfer, external transfer, foreign transfer, wire transfer and ACH transfer.

Pros

  • Usually very quick if the electronic transfer is an internal bank transfer
  • A relatively safe way to transfer money
  • May be free if it is an internal bank transfer
  • Banks tend to make internal transfers very easy
  • Most external electronic transfers can be done online

Cons

  • They are as limited as your bank makes them
  • Some banks and money companies will charge fees for electronic transfers
  • Conducting them manually may be too time consuming if there are many payments to be made
  • They may take between a few days and a few seconds to complete
  • Recurring electronic transfers may cause you to overdraw if you don’t have the money in your account

Direct Deposit


A direct deposit is where money is sent from an account and placed into another account. It is the opposite of a direct debit (ACH transfer), where money is removed from another account and put into another account. A direct deposit involves pushing money out of an account, and a direct debit is pulling money out of an account.

Pros

  • A very efficient way to pay numerous people
  • Clearing direct deposit payments is far quicker than checks
  • It may simplify recurring payments
  • You can change the amounts each time if you wish
  • Less staff hours are required when processing payments for staff

Cons

  • Oversights may cause repetitive payment errors
  • Some companies and people will not accept direct deposits
  • There is usually a charge for using direct deposit
  • Some banks will allow you to overdraw when you send direct deposits
  • Setting up initially may be tricky if you have not used it before

eCheck Transfer


The process is similar to a paper check except it is done digitally. They are typically used to pay merchants or service providers. The sender has a little more control over how the money is paid and/or when it is paid, which is why echecks take between one business day and up to six business days to clear.

Pros

  • They are easier to reverse and investigate than wire transfers
  • May reduce bank fees for costs for merchants that receive them
  • Some merchants will accept echecks while not accepting paper checks
  • Funds will leave your account faster than if you use a paper check
  • See evidence of it on your statement

Cons

  • You don’t receive a copy of cancelled checks like you do with paper checks
  • There may be additional fees for using echecks
  • You have to stay on the ball to keep an eye out for unauthorized transactions
  • There are still some merchants that won’t accept echecks
  • Payment times may vary thanks to network delays

ACH Check Conversion


After 911, the Check 21 bill was passed that stated people might photograph paper checks and deposit them that way. A merchant may photograph your check and use that photograph or scan to deposit the check without physically handing the paper check over to his or her bank.

Pros

  • Handy for businesses that charge a monthly fee
  • Good if you have to pay a different amount on a frequent basis
  • Okay for freelancers and contractors who charge weekly
  • Suitable if you charge customers with an irregular frequency
  • Harder to make errors than if you just use recurring ACH transfers

Cons

  • You may overdraw if you don’t have the money in your account when it is needed
  • ACH debit applications require you to give up some control
  • The merchant may require specialized scanning tools
  • Some merchants may charge a fee to convert checks
  • There are merchants that are not comfortable converting checks

The Biggest Selling Points And Biggest Downsides Of Each

In the section below, you will find the biggest pro for each transfer method and the biggest con for each transfer method. The biggest pro and biggest con has been decided through comparisons to the alternatives. For example, the cost of wire transfers is only its biggest con because compared to the other methods it is probably the most expensive. There are plenty of other money transfer methods that cost more than a wire transfer, but because it is the most expensive method on this article.

The Biggest Selling Point For ACH Transfers When Compared To The Rest

It is one of the cheapest ways to transfer money if you are running a business. Many banks, money companies and credit unions allow you to make ACH transfers for free if you are a private bank customer and not a business.

The Biggest Downside For ACH Transfers When Compared To The Rest

They are going to take at least one night to clear. They are one of the slower methods for moving money, but that is the price you pay for the fact they are often the cheapest.

The Biggest Selling Point For Wire Transfers When Compared To The Rest

There are circumstances where other methods of payment are just as fast as wire transfers, such as internal bank transfers. However, in almost every case, a wire transfer is the fastest way of sending money digitally.

The Biggest Downside For Wire Transfers When Compared To The Rest

Banks, credit unions and money companies love adding fees for sending and receiving wire transfers. The truth is that they are only marginally more expensive than ACH transfers, but banks, credit unions and money companies know they can stick people with fees for wire transfers–and that is often what they do.

The Biggest Selling Point For Electronic Transfers When Compared To The Rest

Since an electronic transfer is the name given for most forms of digital money transfer, it is difficult to say how it beats the rest. Suffice it to say that digital money transfers are often safer and faster than other offline or manual methods of money movement.

The Biggest Downside For Electronic Transfers When Compared To The Rest

The term “Electronic Transfer” is somewhat of an umbrella term that could mean or define numerous types of digital money transfer, and that is one of its biggest downsides when compared to the other transfer methods listed on this article. When somebody says “Electronic transfer,” they may mean ACH transfer, wire transfer, card transfer, and they may even mean a PayPal transfer.

The Biggest Selling Point For Direct Deposits When Compared To The Rest

Its biggest selling point is for larger businesses. If you have a large business, then using direct deposit may save your payroll department a lot of time and therefore save you a lot of money.

The Biggest Downside For Direct Deposits When Compared To The Rest

There are some companies that offer direct deposit services and then tag on nasty fees or hidden fees. There are also some accounts that will not accept direct deposits.

The Biggest Selling Point For eChecks When Compared To The Rest

It depends upon how you generate your echeck and with which company/bank/credit union you create your echeck. Nevertheless, its biggest selling point is that you may have more control over when the money clears from your account and into the recipient’s account.

The Biggest Downside For eChecks When Compared To The Rest

Of all the methods on this article, it is probably the least useful except when trying to protect buyers. Almost all the other methods on this article are quicker and/or more convenient with the exception of ACH check conversion. Unless you are protecting yourself with something such as PayPal’s echeck system, then there are more convenient methods for paying.

The Biggest Selling Point For ACH Check Conversions When Compared To The Rest

It means you may write a check and still pay for things with merchants that may not accept paper checks. ACH check conversions are also brilliant for people who get paid by paper check, but who have an online bank that accepts mobile deposits because all the customer has to do is take a photo of the check and send it via the bank’s app to have it deposited in their bank account.

The Biggest Downside For ACH Check Conversions When Compared To The Rest

Of all the payment methods, some are going to consider this method more of a hassle because a check has to be written, handed over, and then scanned and accepted. These days, it is far easier to walk into a store and pay with your debit card or credit card.

Is One Safer Than The Other?

In almost every case, security or how safe a method is will depend upon the institution that conducts the transaction, but more importantly, it will depend upon the users of the payment method.

Most security breaches happen because of things such as identity theft. Others happen because the sender was tricked or scammed. Sometimes, a security breach occurs or money is lost because of an honest human error on the part of the sender, such as entering incorrect account information when setting up a payment.

Conclusion – Know You Know What Is What

It is up to you to decide which is the best money transfer method for you. This article has given you their most popular pros and cons, and then it has compared their strongest and weakest points with all the other money payment/transfer methods.

There is no single perfect money transfer option. If there were, then why bother having so many? The biggest concerns are usually cost and timeliness. Most of the money-transfer options listed on this article exists because they transfer money either quickly or cheaply. Some exist right now, but probably won’t exist much longer as things such as paper and electronic checks are slowly phased out. Pick the transfer method that suits your budget and your schedule.

About The Author

Ash The Great

After a varied career in different industries from the hospitality industry to the financial consultancy industry, Ash now spends his days working as a professional writer.

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