Electronic Transfer vs Wire Transfer: Differences, Similarities and How They Work

As commerce becomes increasingly digitized, businesses and consumers alike are turning to electronic payments to buy and sell goods and services. But which payment method offers the best option?

Electronic fund transfers and wire transfers are commonly touted as the strongest electronic payment options on the market. However, there are some clear differences between the two. Businesses need to be aware of these differences to avoid making late payments by mistake or getting stung by steep transfer fees.

In this post, we’re going to define the similarities and differences between EFTs and wire transfers, and how businesses can decide which is the most appropriate option for their payment needs.


  • What’s the deal between electronic transfer vs wire transfer? EFT (electronic funds transfer) refers to any electronic payment method, including ACH, wire transfers, and Point of Sale (POS) transactions.
  • EFTs usually process funds via an automated clearing house (ACH) while wire transfers are sent directly between one bank and another.
  • Wire transfers have the benefit of being faster and having higher transfer limits than EFT methods, but they carry higher fees and are not reversible.
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What is an Electronic Funds Transfer (EFT)?

An EFT is an umbrella term referring to any electronic transfer of funds from one account to the receiving bank at the request of the account holder. This includes debit and credit cards, e-checks, ATMs, and Point of sale (POS) transactions.

Because they are entirely digital, electronic payments have no paper footprint and can be actioned on the same business day they are initiated. This makes EFTs easy and convenient for businesses and consumers alike.

How Do EFTs Work?

EFT payments involve two parties; the account sending the money transfer and the account receiving it. Once the transfer has been initiated and the request logged, the funds may progress through an Automated Clearing House (ACH), a payment terminal, or an ATM before reaching the receiver’s account. The timing will depend on the specific payment method being used, from the same-day availability of funds to 1-3 business days.

Types of EFTs

Businesses and consumers have several types of transfers to choose from when using EFTs. The most appropriate transfer method will depend on your needs e.g. one-time or bill payments:

Debit cards and credit cards. Cards can be used to set up one-off or recurring online transactions.

ATMs. Allows someone to instantly withdraw or deposit funds in their checking account, without needing to visit a bank directly.

Point of sale (POS) transactions. A card reader at the checkout allows account holders to make purchases in-store using a card attached to a specific bank account.

ACH Transfers

ACH payments are the most common transfer type that falls under the EFT umbrella. Because they require minimal oversight by bank employees and aren’t subject to card network charges, ACH transfers are very affordable for banks and credit unions. In 2021, 29.1 billion payments valued at $72.6 trillion were processed via the ACH system.

While all ACH payments are considered EFTs, not all EFTs undergo the ACH process. This includes debit cards and credit cards, as card payments are electronic but do not involve the ACH network.

How Do ACH Transfers Work?

ACH payments work by processing payments through a network of financial institutions overseen by the national automated clearing house association (NACHA). The originator i.e. the bank which initiates the transfer will send funds to the clearing house. Payment processing takes place in batches, rather than by individual transactions, which keeps the cost down for banks. Once the funds arrive at the receiving bank, they are credited to the relevant account, usually by the next business day.

The following payment services are generally considered ACH transactions:

Direct deposit. This includes both deposits and withdrawals for one-time and recurring payments.

Direct Debit. When a creditor, such as a utilities company or subscription, is authorized to withdraw funds at regular intervals.

Person-to-person (P2P) Payments. Third-party payment processors such as Venmo and PayPal require ACH to move money cheaply between wallets.

Bank transfers. Businesses can make direct payments using account-to-account transfers. This requires account information such as the bank account number and routing number.

E-checks. A more secure alternative to paper checks, e-checks allow an account holder to withdraw money from their checking account and deposit it within another account via an online payment form or phone authorization.

What is a Wire Transfer?

A wire transfer refers to a specific type of electronic fund transfer where individual funds are made between one bank account and another. Wire transfers rely on a secure messaging system, such as Fedwire in the case of domestic wire transfers or SWIFT for international wire transfers.

Because wire transfers can be processed quickly, they are a useful payment method for timely transactions that involve large sums of money, such as house deposits or loan repayments. However, this does come at a higher cost due to its expedited nature.

How Do Wire Transfers Work?

A wire transfer is sent by an account holder by providing their bank or a third-party payment service with the details of the account for which they want to send funds. This includes:

  • The payment amount
  • The account number where the funds are originating from
  • The contact details of the recipient (name, address, phone number)
  • The routing number or SWIFT code for the receiving bank
  • The bank account number where the funds are being sent

Once the transfer amount has been deducted from the originating account, the sender will be charged a fee for the wire transfer. A fee may also be deducted from the transfer amount by the receiving bank once the wire arrives.

How Are EFTS and Wire Transfers Similar?

Let’s dive into the similarities between electronic transfers vs wire transfers.

Both are classed as electronic payments

Because EFT is an umbrella term, a wire transfer is considered a specific type of electronic payment. Both EFTs and wire transfers can be used to move funds domestically and internationally from one bank account to another using an app or online portal. As a result, EFTs and wire transfers both should be considered secure ways to send and receive money. Wire transfers have a bit more specificity in how they function, which makes them distinct from other kinds of EFTs.


Because they have done away with manual offline transfers of cash or checks, EFTs and wire transfers offer consumers and businesses several easy methods to move money around without needing to go into a bank or speak to personnel. So long as you have all the details of the receiving account, it’s a fairly quick process to set up a payment inside your online banking or a third-party platform.

Electronic Transfer vs Wire Transfer: Differences 

In many respects, EFTs and wire transfers are hard to tell apart. They are both secure forms of electronic payment that make it straightforward to send funds quickly from one account to another. The person who is receiving the funds will not be able to tell whether the money was sent using a wire transfer or EFT.

However, there are some crucial differences between EFTs and wire transfers that businesses should be aware of to understand which is the better option for their circumstances.

Processing timeframes

If speed is a top priority, a bank wire transfer is the best option. Because wire transfers are individual transactions, they are processed much faster than ACH payments, where payment may be held up until enough funds are received by the bank to form a batch transfer. A domestic wire transfer can be sent and received within the same business day, making it appropriate for situations that require an urgent transfer of funds. Likewise, international wire transfers or remittances ensure fast delivery of money to overseas accounts, usually within 1-2 business days.


Because of the quick availability of funds in the receiving account, wire transfer fees are more expensive than EFT transfers, which carry minimal or zero fees. The cost of a wire transfer may depend on the amount you are sending, as well as the fees charged by both the originator and the receiving bank.

Fees for international wire transfers will generally be higher than for domestic transfers, and additional fees that are charged by third parties during the transfer process can make it difficult to determine how much you need to factor into the overall amount.

As a result, wire transfers are very costly for recurring payments such as bills and utilities, and scheduled ACH payments may present a better option.

Types of payments

When it comes to wire transfers, there are relatively limited options. Businesses have a choice between either domestic or international wire transfers, depending on the end destination of their funds. Electronic Funds Transfers, meanwhile, is an umbrella term that covers a much broader range of payment types, from in-person transactions such as ATM and credit card transactions to ACH payments made via online banking or person-to-person payment apps. This makes EFTs more flexible for both businesses and consumers.

Transfer limits

Both EFTs and wire transfers are subject to limits on how much money can be sent. These are set by the financial institution that is transferring the funds and varies between providers. EFT transactions, such as ACH, ATMs, and credit cards, have lower limits for how much money can be sent or withdrawn daily, monthly, or in a single transaction. This can vary anywhere from $2000 a month to as high as $25,000. Because wire transfers are slightly more expensive, they generally have a higher transfer limit than EFTs. This can be as high as $100,000 in a single transaction but depends on the kind of bank account you have.


Both wires and EFT payments offer secure transfer systems, but EFTs have a slight edge in this area. While wire transfers go through fewer intermediaries, they represent a permanent transfer and cannot be reversed in the case that the receiving bank details are wrong. Transfer providers such as Western Union have no liability in the case that payment details are incorrect, as transfers are sometimes completed too quickly for funds to be retrieved by the time an issue is identified. By comparison, EFT payments such as ACH transfers are under the oversight of the Federal Reserve and must pass through the NACHA system, making it possible to reverse and retrieve funds.

Which is Better: EFT or Wire Transfer?

Both EFTs and wire transfers offer secure and convenient ways to send and receive funds. The suitability of one method versus another will depend on why your business is sending funds and how quickly you need them to arrive.

Because they are fast and have larger transfer limits, wire transfers tend to be the better option in the following circumstances:

  • You need to transfer a very large sum of money i.e. a house deposit.
  • You need to transfer funds urgently.
  • You need to make a one-off payment i.e. a remittance.
  • You need to make a secure cross-border payment.

For smaller payments that aren’t as time-sensitive, EFTs are more suitable. EFTs also work in situations where:

  • You need to schedule regular recurring payments i.e. to employees or utility providers.
  • You want to save money on transfer fees.
  • It’s the first time making a transfer to an entity, and you want the ability to reverse transactions if necessary.
  • You want a greater choice of payment methods to choose from.

The Bottom Line When It Comes to Electronic Transfer vs Wire Transfer

Most businesses are likely to use a combination of wire transfers and EFT payments, so it’s important to make sure you understand the pros and cons of both methods in different scenarios. By using this guide, you can feel confident in your payment strategy and move funds with ease.

Want to implement either or both of these payment methods in your business? Get in touch with the Stax team today!

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