ACH vs. EFT – A Detailed Guide

If you make regular payments by electronic means, then it’s important to understand the distinction between these two types of transactions. At a high level, ACH is an automated process that banks use to move money from one account to another, while EFT is a more general term used to describe any type of electronic funds transfer.

In this article, we’ll take a closer look at the key differences between ACH vs. EFT so that you can better understand how each one works.

What is ACH?

ACH stands for Automated Clearing House. It’s an electronic network that processes large volumes of credit and debit transactions in batches.

While ACH is sometimes used interchangeably with EFT, it’s important to note that not all EFT transactions are processed through the ACH network. For example, transfers made using a point-of-sale terminal or ATM are not processed through the ACH network.

ACH transactions are typically initiated by businesses and government agencies to make recurring payments, such as payroll deposits or tax refunds. In some cases, individuals may also initiate ACH transactions to pay bills or send money to friends and family.

ACH transactions are processed in batches, which means that they’re not processed in real-time. This can take a few days for the transaction to be completed.

What is EFT?

EFT stands for Electronic Funds Transfer. It’s a general term used to describe any type of electronic transfer of money from one account to another.

While all ACH transactions are processed through the EFT network, not all EFT transactions are processed through the ACH network. For example, as we mentioned earlier, transfers made using a point-of-sale terminal or ATM are not processed through the ACH network.

EFTs can be initiated by businesses, government agencies, or individuals. They can be used to make one-time or recurring payments.

EFTs can be processed in real-time or in batches. Real-time EFTs are processed immediately, while batch EFTs are processed in groups at set intervals.

Now that you understand the difference between ACH vs. EFT, let’s take a look at some of the key benefits of each type of transaction.

Benefits of ACH Payments

There are several benefits of using ACH payments, which include:

• Reduced costs: ACH payments are typically less expensive than other types of electronic payments, such as credit card payments or wire transfers.
• Increased efficiency: ACH payments are processed in batches, which can save businesses time and money by reducing the need for manual processing.
• Increased security: ACH payments are processed through the Federal Reserve Bank, which means that they’re subject to strict regulation. This increases the security of ACH payments and reduces the risk of fraud.
• Increased accuracy: ACH payments are less likely to be rejected or returned than other types of electronic payments. This can save businesses time and money by reducing the need for manual processing.

Benefits of EFT Payments

There are several benefits of using EFT payments, which include:

• Increased flexibility: EFTs can be used to make one-time or recurring payments. This can be helpful for businesses that need to make occasional payments, such as invoices or commissions.
• Increased security: EFTs are processed through the Federal Reserve Bank, which means that they’re subject to strict regulation. This increases the security of EFTs and reduces the risk of fraud.
• Increased accuracy: EFTs are less likely to be rejected or returned than other types of electronic payments. This can save businesses time and money by reducing the need for manual processing.
• Reduced costs: EFTs are typically less expensive than other types of electronic payments, such as credit card payments or wire transfers.
• Increased efficiency: EFTs can be processed in real-time or in batches. Real-time EFTs are processed immediately, while batch EFTs are processed in groups at set intervals. This can save businesses time and money by reducing the need for manual processing.

Now that you know the key benefits of ACH vs. EFT.