What Is the Difference Between an ACH and a Wire Transfer?

A wire transfer moves funds from one bank to another almost immediately while the automated clearing house processes and executes transfers in batch, explains Deposit Accounts. This makes wire transfers faster but more expensive. In fact, banks often charge both senders and recipients a fee for wire transfers.

There are two types of wire transfers, according to Deposit Accounts. One is a transfer from one bank account to another bank account. Banks verify both accounts prior to the transfer, which makes it fast and secure. Alternatively, wire transfers can be used to transfer cash from one person to another through a system such as Western Union. However, in cash transfers, the sender or receiver may use a false identity to conduct fraudulent transactions.

The ACH system uses a single network operated by several entities, notes the Federal Reserve. Common uses for ACH transactions include direct deposits, tax refunds and automatic bill payments.