ACH vs. EFT: What’s the difference?

Both ACH and EFT are ways of making a payment. Some would argue that these are the future and will replace writing a check or giving money in hand. 

To clearly understand the differences between these payment methods, you first need to know what the acronyms stand for. After this, the differences will appear on their own. 

Electronic Fund Transfers (EFT)

EFT is short for Electronic Fund Transfer. It is composed of several electronic payments and is based on the idea of cashless operations. This system moves the money throughout a digital network, allowing users to move funds without dealing with cash. EFT operations are more common than you might think. They include direct deposits, bill payments, and even withdrawals from ATMs. 

Electronic Fund Transfer involves many terms and includes ACH payments. However, it is not limited to that. What characterizes EFT’s is that all of their payments are authorized by either password, cards, or pin codes, compared to other methods where the one authorizing the payment is the bank staff doing it manually. 

Automated Clearing House (ACH)

ACH stands for Automated Clearing House. It is more specific than EFT, and the system refers to a bank-to-bank operation. This operation happens when a bank sends money to another through the ACH network, which financial institutions use. This system is safer than others, and it takes care of clearing issues and settlement issues. ACH system enables most of the electronic operations for banks or credit unions based in the United States. 

You can see ACH transactions in many operations. Some of the examples of ACH are the following: direct payroll deposit, social security benefits, and auto bill pay. The transaction fee is somewhat low since the system moves all of the funds in large groups, offering the customer a cost-effective way to transfer money quickly and safely from one place to another. 

Differences between ACH and EFT

So here’s the real question: what is the difference between both systems? All ACH transactions are qualified as EFT; however, it is not the other way around. EFT transactions can use the ACH system, but it is not the case for all transactions. 

EFT is more extensive, and it includes transactions such as digital wallets, wire transfers between banks, and ATM withdrawals. The big difference that you will find between both systems is that ACH only refers to transactions made with the Automated Clearing House network, while this is not the case for EFT. 

Another difference between EFT and ACH is that the operation’s timing and cost are not the same. As explained before, ACH transactions are sent in groups or big batches, which means the operation cost is lower. While the ACH sends payments in groups, the EFT sends payments individually, making them more expensive. 

Continuing with the differences, the EFT’s are digital transfers of funds that can be carried out within a bank or between banks, for example, an ATM operation. On the other hand, with ACH payments, the funds are moved from one bank to another, including a stop in the Automated Clearing House, where the payment is recorded and processed. Also, Electronic Fund Transfers are quicker and even done in real-time from time to time. This being a huge advantage for many people. 

Is safety an issue?

A question many people ask is whether the systems are safe or not. Electronic fund transfers can be scary for some, especially if they do not trust the digital world. However, ACH and EFT payment methods are safe and offer a faster, less complicated transaction since there is close to no paperwork. They are more convenient than other methods.

When you need to make a payment, you will verify and authorize the transfer by stating that your banking information is correct. After that, when the funds get to the other party, you will receive a notification. By doing this, the payment can be both trackable and safe. However, when you use the ACH method, it is different. 

ACH transfers are made via the ACH network from one account to the other only after the payer verifies the details of the account. The ACH network moves the funds from one place to another without any interference across the country. The system is managed by NACHA (National Automated Clearing House Association). This organization is in charge of administering the payments and making sure that the movement is safe. 

NACHA manages the Automated Cleaning House network, as explained before. It is the center of transactions; they process every one of them and send them to their destination. They connect every bank in the country, and they manage to send the money from one place to another, using groups of payments. 


This new technology can help you save money, problems, and time, a lot of time. People would argue that it is not safe enough or that it is new and has issues. But don’t worry, they are safe, and they will not make you lose money. They will help you spend less, worry less, and spend time on yourself instead of doing heavy paperwork that nobody wants to do.

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