Difference Between EFT and ACH

Edited by Diffzy | Updated on: April 30, 2023


Difference Between EFT and ACH

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Contractors, suppliers, vendors, and employees must all be paid regularly. It's what a business owner does. EFT payments can be made instead of utilizing paper to pay people. The electronic funds' transfer is referred to as EFT. EFT payments are sent and received in business to help speed the payment process. The truth is that electronic payments are becoming increasingly popular. Over 5,800 million people used electronic transfers in 2018. There are several acronyms here, which may be confusing.

According to a fast rule of thumb, all ACH transactions are EFT transfers, but not all EFT payments are ACH transfers. Both payment options allow you to set up automatic payments from your bank account, but they do it slightly differently.


A type of electronic funds transfer is ACH. Thus, while all ACH transactions are electronic funds transfers, not all electronic funds transfers are ACH transactions. All sorts of electronic payments are covered by electronic funds transfers. The Automated Clearing House Network, on the other side, is where an ACH payment is made.

The fundamental distinction between EFT and ACH payments is that EFT refers to all digital payments, whereas ACH refers to only one sort of digital payment. However, they are both electronic payments, and ACH is a sort of EFT payment. When money is transferred from one bank to another, it is referred to as an ACH payment, either a direct deposit or a direct payment.

For many years, electronic payments have been on the rise. However, the pandemic has accelerated technology adoption by businesses and individuals. Several businesses have stopped accepting cash for hygiene reasons, at least temporarily. Now is the moment if you've been thinking about incorporating electronic payments into your business.

EFT payments come in many different forms. ACH EFT, credit card processing, direct deposit, checks, and other options. Your surroundings will determine the best balance for your company. A direct deposit or echeck balance may be the best option if you have a recurrent business that pays remotely and in large amounts (such as a corporate law firm)—if you have a lot of one-time or in-person customers (like an accountancy company or an eCommerce store), accepting a higher percentage of credit card payments might be a good idea. The best balance for your company and customers is most likely in the middle.

Difference Between EFT and ACH in Tabular Form

Parameterof comparisons EFT ACH
Definition EFTs are any transfer of funds from one account to another that occurs electronically. Efts include both ACH and Wire Transfer services. ACH transfers are referred to as EFT transfers because EFT is a term that covers several different types of financial transactions.
Activity Transfers money from one bank to another. Connects different banks.
Time Instant Comparatively slower

What is EFT?

An electronic funds transfer (EFT) transfers money using a computerized network from one account to another. Both the sender and the receiver of an EFT must have a bank account. The accounts don't have to be at the same banking institution to transfer funds. EFT payments can be made via computer, card reader, or phone for both individuals and corporations.

Efts debit one person's account while crediting the other's. Electronic banking is another term for EFT transactions. There is no need for cash because everything is done electronically. The Electronic Fund Transfer Act governs electronic fund transfers. The EFTA is a federal statute protecting those who make electronic funds transfers.

What Are The Advantages Of EFT Payments?

Other types of EFT transactions, including ACH payments, are a faster and less expensive to transfer money than checks while making the process easier for both businesses and customers. Say goodbye to writing, printing, and mailing checks and rushing to the bank to deposit at the last minute. This practical and secure money transfer method eliminates administrative burdens and labour costs. Finally, businesses can boost their cash flow because the payments are electronic. "The check is in the mail" no longer applies.

EFT Variations

You can send money online in a variety of ways. Here are a few examples of EFT payments that your company might use. Employees can be paid using direct deposit. Following payroll, inform your direct deposit service provider of the amount deposited in each employee's bank account. The money is then transferred to employee accounts via direct deposit on payday by the direct deposit provider. Because not all companies have the authority to make direct deposit mandatory, familiarize yourself with the rules surrounding direct deposit.

  1. Money is sent quickly through wire transfers. Because there is a cost, they are usually reserved for large, infrequent payments. You may utilize wire transfers to pay vendors or put down a substantial deposit on a building or piece of equipment.
  2. Usingthe Electronic Federal Tax Payment System (EFTPS).
  3. ATMs allow you to do banking transactions without visiting a bank or speaking with a teller. You can withdraw money, deposit money, and transfer money between accounts.
  4. You can make EFT transactions using debit cards. one can transfer funds from a business bank account using a debit card. Online, in person, or over the phone, use your debit card to make purchases or pay bills. Customers can pay with their debit cards.
  5. Electronic checks are comparable to paper checks, except they are utilized digitally. You must first input your bank account and routing numbers to make a payment.
  6. Paying bills, transferring money between accounts, and receiving payments over the phone are all possible with mobile wallets.
  7. Personal computer banking allows you to do business using your computer or mobile device. You can transfer money between accounts using your computer or mobile device.

The Process For Making An EFT Payment

Perhaps you'd like to send someone an EFT payment. You could also allow customers to pay you via e-transfer. The sender must have the recipient's bank account details to make an EFT payment. You must authorize the fund's transfer if you're making an EFT payment. The funds are then transferred from one's account to the beneficiary's account. Some EFT transactions can be subject to a charge. Certain ATM transactions, for example, may be subject to a fee. Other transactions, on the other hand, maybe without charge.

Processing Time for EFT Payments

The time it takes to process an EFT payment is determined by the following factors:

  • The payment method
  • Your EFT service provider
  • When you make a payment,

It could take up four days for EFT payment to clear. Electronic financial transfers are sent and received on some days (e.g., wire transfers). EFT payments are usually processed only on the business days. There may also be specified deadlines. For example, you might need to conduct an electronic money transfer before 9 p.m. If you place your order after that time, it will not be processed until the next working day.

Is It Possible To Cancel An EFT Payment?

Usually, you cannot cancel an EFT payment once initiated. The EFTA does not allow you to do the so. It is up to you and the individual you paid if you need to stop a payment or have your money refunded. You may, however, be able to halt periodic EFT payments (e.g., scheduled utility EFT). You can cancel an impending scheduled payment by alerting your financial institution three business days before the next scheduled transfer.

Stopping scheduled transfers should be done according to the your financial institution's policies. Otherwise, your stop could be nullified. Check your state laws to see if there are any additional regulations.

What Is ACH And What Does It Mean?

The transfer of money from one financial institution account, such as a bank or credit union account, to another is known as ACH in the United States. The Automated Clearing House, governed by Nacha, processes an ACH payment transaction for bank and credit union members. The Automated Clearing House provides Same Day ACH, Next Day ACH, and standard ACH periods, as stated in the Nacha table. Business days are referred to as Same Day and Next Day ACH.

What Is The ACH Payment And Transfer System?

For domestic bank transfers in the United States, ACH payment is the preferred mode of payment. ACH is a dependable, efficient, and cost-effective method of electronically moving cash between accounts. Inter-institution transactions are processed by the Automated Clearing House system, which the ACH network uses. The Automated Clearing House uses batch processings for ACH payments, which together several ACH transfer requests to pay them all at once.

ACH debit and credit transactions are becoming more popular. ACH transactions are tracked in Nacha data by year and quarter. The ACH networks processed 26.8 billion transactions in 2020, up 8.2 per cent from the previous year. The total value of ACH transactions in 2020 was $61.9 trillion, up 10.8% from the previous year.

The use of ACH is on the rise, according to Nacha:

"In the last six years, the volume has climbed by MORE THAN 1B."

For the past eight years, the value has climbed by MORE THAN $1T.

Payroll (direct deposit) and recurring utility payments are increasingly using ACH as a payment method (auto bill-pay). Nacha estimates that ACH B2B payments, including accounts payable payments, will increase by 4.4 billion transactions or 10.7% in 2020.

ACH Payments Advantages

Here are a few reasons why your company should accept ACH payments:

  1. Option for Extra Payment One of the most compelling reasons to consider ACH payments for your company is to give your consumers another way to pay. It's usually better to offer additional options when processing payments remotely (such as online).
  2. Security -  Another advantage of ACH payments is that they are secure, deposited promptly, and have a low risk of fraud.
  3. Cost - ACH payments are typically far less expensive than credit card processing.

Main Differences Between EFT And ACH in Points

  • The digital movement of money between two bank accounts of the same or separate banks is known as electronic fund transfer or EFT. ACH, which means Automated Clearing House, is a clearing and settlement system that helps electronic process transactions between two depository institutions.
  • EFT refers to transferring funds between two bank accounts safely, conveniently, and securely. On the other hand, ACH connects national banks and financial organizations to make monetary transactions easier.
  • Transferring funds using EFT takes less time than through ACH since the latter requires the transfer to be done in batches, which takes time, whereas the former settles the transaction in real-time or near real-time.

Comparison of EFT And ACH Payment Methods

  • EFT and ACH payments have become more widespread as online banking and money transfers have grown popular. EFT and ACH definitions, examples, and explanations of how EFT and ACH payments work are presented.
  • EFT (electronic funds transfer) refers to ACH bank transfers, wire transfers, and other online electronic payment systems.
  • ACH payment is an electronic bank transfer with the U.S. from one bank account to another, made by financial institution members of Nacha through the Automated Clearing House.
  • Paper checks and wire transfers are more expensive to handle than ACH payments. ACH processing and receipt times are faster, and ACH costs less than paper checks.
  • Echeck, also known as "global ACH" to emphasize the similarities, is an electronic bank transfer system used for international or cross-border transactions outside the United States.
  • The difference is that ACH is a specific designation for one electronic payment technique, whereas EFT is a form of EFT.


Paperless financial transactions are becoming more popular, increasing the use of EFT for online bills, recharge, purchases, and other payments. On the other hand, ACH is one of the earliest electronic modes of fund transfer, and it is used to make payments such as bills, interest, and dividends. We have the technology you need to accept the electronic payments in the current world, whether credit card payments, ACH transactions or both.



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"Difference Between EFT and ACH." Diffzy.com, 2024. Mon. 10 Jun. 2024. <https://www.diffzy.com/article/difference-between-eft-and-ach-659>.

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