ach vs eft

ACH vs. EFT: What is the Difference?

Paper checks used to be the gold standard for businesses looking to make secure payments, but with the advent of secure electronic payments, that’s no longer the case. There are many different types of payments that fall under the electronic payments umbrella, such as EFT and ACH. While these different payments have a few things in common, they have their fair share of differences. If you are wondering what sets ACH and EFT apart and how they work, read on to find out.

In this article, you’ll learn the differences between EFT and ACH payments, including what they are and their pros and cons.

What is EFT?

EFT, an acronym for Electronic Fund Transfer, encompasses a full range of electronic payments. With this transfer system, funds are moved across a computer network for a cashless transaction. Direct deposits, wire transfers, and ATM withdrawals are all examples of EFT transfers. In general, the term refers to all electronic payments, which also include ACH payments. The authorization of EFT payments is not done by bank staff but by pin codes, cards, or secure passwords.

Payments made via EFT are also known as e-Payments or e-Checks (electronic checks) since they are made online without using paper checks. 

It is easy to receive payments via EFT. A recipient receives a notification when a payment has been received from a payer and whether the funds are pending or available. 

Pros and cons of EFT

Similar to ACH payments, other forms of EFT provide a faster and cheaper method to transfer money than checks while making the entire process easier on consumers and businesses alike. Rather than writing, printing, and mailing checks, followed by an impromptu trip to the bank to deposit them, you are able to visit your bank whenever you please. The system of moving money is efficient and secure, minimizing administrative hassles and reducing labor costs. Electronic payments also allow businesses to increase their cash flow, as businesses no longer need to wait for checks to arrive in the mail.

Some more specific pros and cons include:


  • Payment processing is less costly than credit and checks processing
  • Transfer of funds is faster and more efficient
  • Safer than carrying cash and checks
  • Simple to use 
  • Uses digital technologies 
  • Automatable 


  • It is essential that customers have access to funds immediately.
  • It is still possible for payments to bounce when using EFT.
  • A copy of the canceled check won’t be sent to you.

How long do EFT payments take?

EFT payments take a certain amount of time to process based on:

  • The payment type
  • The time when you submit your payment
  • The EFT service provider

It may take one to four days for your EFT payment to be processed. Electronic funds transfers (e.g., wire transfers) are sometimes sent and received on the same day. 

In general, EFT payments are only processed on business days. Certain cutoff times may also apply. An electronic money transfer, for example, must be placed before 9 p.m. A transaction placed after that time will not start until the next business day.

What is ACH?

EFT refers to a broad category of payments, but ACH relates to a specific type of EFT. This system refers to the transfer of funds between financial institutions that use the Automated Clearing House, which is regulated by Nacha. In addition to clearing and settlement, this system enables electronic transactions between banks and credit unions in the United States. Social Security payments, auto bill payments, and payroll direct deposits are examples of ACH transactions. Transfers are made in large batches or groups, which reduces fees per transaction. ACH payments are a cost-effective way to transfer funds from one bank account to another relatively quickly and efficiently.

Direct deposits and direct payments are the two types of ACH payments. Direct deposits via ACH include employees’ paychecks, tax refunds, government benefits, and interest payments. This is an ACH credit coming directly from a company or government to a consumer.

A direct payment through ACH occurs when funds are used to make a payment by either an individual or an organization. A direct payment is, for example, when a consumer pays his or her electric or cable bill automatically from a checking account. In addition, when a business pays for services or goods, the funds are electronically deducted from its operating account. 

Pros and cons of ACH

ACH payments can bring many benefits to businesses that accept them. As a business, you can offer alternative forms of payment to your customers, making paying more flexible. Furthermore, ACH payments are faster and less expensive to process than paper checks or credit cards.

Some other pros and cons of ACH payments include:


  • ACH payments are less expensive than paper checks and wire transfers (The median transaction fee is $0.29).
  • In comparison to checks, the processing time is faster.
  • Payment interruptions are reduced for recurring payments. 
  • Safer than wire transfers and other e-payment methods.


  • Many platforms are restricted to the US.
  • Point-of-sale (POS) transactions are not well suited to this device.
  • To use this service, you must be a member of NACHA (National Automated Clearing House Association)

How long do ACH payments take?

Payments processed through ACH usually take 1-2 business days. However, some services offers Same Day payments, which come with a higher fee for the payer.

Zelle, among other payment services, offers free instant bank-to-bank transfers via ACH (and other networks). The money is immediately available in the recipient’s account, and the transfer is settled later with ACH.

What Are the Differences Between ACH and EFT Payments?

When you compare ACH and EFT, you’ll notice that the main difference is scope. EFT and ACH payments are similar in that they are both electronic methods of payment. An ACH, however, is a type of EFT. In contrast, EFT is a general term that refers to all digital payments. An ACH payment occurs when money is transferred from one bank to another. Funds are transferred electronically via the Automated Clearing House Network. Through this network, all U.S. financial institutions are able to transfer money safely and quickly from one bank to another.

Although all ACH transactions are also EFTs, the opposite isn’t true. Electronic funds transfers include transfers between banks as well as things like digital wallets and ATM cash withdrawals. ACH and EFT differ primarily in that ACH refers to payments sent through an Automated Clearing House. ACH Network sends money to the payee’s bank in batches during the day, but not in an instant. Processing and receipt by the payee may take 1-2 business days instead. While ACH requires a little processing time, it is still faster than processing a paper check.

EFT payments, meanwhile, are typically faster than ACH transactions, occurring in some cases immediately in real-time. An organization can benefit significantly from this, especially when all eyes should be on cash flow.

Timing and cost are other differences between ACH and EFT. In contrast to ACH transactions, some EFT transactions are sent individually, which can result in higher fees.

It is important to consider the costs associated with implementing the technology, ongoing transaction fees, and whether the electronic payment technology can integrate with your current accounting program. You also want to train your team on the payment platform to ensure that the transition is a smooth process.

ACH and EFT Security Regulations

ACH payments are considered among the safest transactions, despite their longer transaction time. ACH payments don’t require a specific or mandatory certification, but the National Automated Clearinghouse Association (NACHA) does offer voluntary security requirements. Nacha administers the operating rules for any private organization, defining the responsibilities of each ACH Network participant, and taking action to ensure compliance.

EFTs, in general, are governed by the Electronic Funds Transfer Act. Credit and debit cards are protected under this federal law. It also limits consumer liability in the event of a stolen or lost card.

Furthermore, the Payment Card Industry Data Security Standards Council was formed in 2006 to oversee and manage the security standards for credit card use. Any business that accepts, stores, or processes credit card information is subject to the Payment Card Industry Data Security Standard (PCI DSS). Credit card companies, including Visa, Mastercard, American Express, and Discover, jointly developed these security standards.

Are electronic funds transfers safe?

Sending money by ACH or EFT reduces paperwork and saves time. They’re convenient, but are they secure? Certainly, verifying your banking details and approving the transfer are both required when setting up a payment. When the funds arrive at the other end, you’ll receive a notification. They become trackable and secure this way.

Once the user’s details have been verified, ACH transfers are sent to another account. Money is sent through the secure ACH network, which connects financial institutions across the country without interfering with them. NACHA is responsible for managing all administration and ensuring secure payments for the entire system.

How to Initiate ACH and EFT Transfers

While the specifics of setting up an ACH or EFT payment will differ depending on the platform and service provider you are using, they generally follow a similar process.

Here’s how to initiate a payment for each:

How to initiate an ACH transfer

An ACH payment can be set up with a customer by following these steps:

  • You should collect the bank account information of the client (or, if you’re the vendor, you’ll probably give the client your banking information). For both payees and payers, you need a bank routing number and account number. This collection is usually done through third-party platforms, such as Stripe.
  • Input the payment amount into the platform.
  • The payment can be processed on a scheduled payday or as soon as possible.
  • You might have to pay a fee to receive the transfer, or the payer might cover it, or you might pay a flat fee to use the software with no per-transaction fee.
  • Since ACH transfers are made through banks, they are subject to their business hours and have cutoff times. Your platform will let you know when you can expect a transfer to hit a recipient’s account.

How to Initiate an EFT transfer

EFT Payments require permission from the vendor or customer from whom you are sending or collecting payment, as well as their bank account information. You will need to have your customers and vendors fill out and return a form that details their contact and account information if you are using your bank. With this information, you can set up an EFT payment through your online banking.
You and your supplier or customer must provide the necessary information for the payment to be debited from the payer’s account on the agreed-upon date and deposited into the payee’s account. It may take 1-5 business days for transactions to appear in the payee’s bank account, depending on the provider, though in some cases, it’s near instant.

Final Thoughts

Electronic payments have been growing massively for years, and as a business, it’s important that you have the necessary setup in place to meet your customer in the middle when it comes to the payment options they use. Since EFT encompasses many payment forms, you don’t necessarily need to adopt all of them if it doesn’t make sense for your business. With ACH payments, on the other hand, it’s easier to determine whether you need them or not since they are much more limited in scope.

The right balance of payment options will change depending on your type of business and your clientele.

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