Electronic payments come in many forms, but two of the most common—ACH and EFT—are often confused. Electronic funds transfer (EFT) is a broad category that includes any electronic transfer, while Automated Clearing House (ACH) transactions are one type of EFT. Understanding how these two categories overlap and interact can make it easier to decide the best payment method for your business.

We’ll cover the differences and overlaps between EFTs and ACH payments, what each type is used for, and what you should know about electronic payment methods for your business.

What’s in this article?

• What is an EFT?
  
• What is an ACH payment?
  
• ACH vs. EFT: What’s the difference?
  
• ACH vs EFT: Deciding what’s best for your business
  
• FAQs about ACH payments and EFT transfers
  
• How Stripe Payments can help
  

What is an EFT?

EFTs are transactions that move funds electronically between different financial institutions, bank accounts, or individuals. EFTs are commonly referred to as electronic bank transfers, e-checks, and electronic payments.

Types of EFTs:

• ACH transfers: Cost-effective, batch-processed transfers through the Automated Clearing House network, commonly used for payroll direct deposits and recurring bill payments

• Wire transfers: High-speed, bank-to-bank transfers designed for time-sensitive or high-value transactions that require immediate settlement

• ATM transactions (withdrawals, deposits, and transfers): Electronic self-service banking actions, including cash withdrawals, deposits, and real-time transfers between linked accounts

• Debit card transactions: Point-of-sale payments that instantly authorize and deduct funds from a customer’s checking account to pay for goods or services

• Peer-to-peer payments: Instant digital transfers between individuals via mobile apps or online platforms, typically linked to an email or phone number

What is an ACH payment?

ACH payments are electronic transfers of funds sent using the Automated Clearing House, a centralized US financial network for banks and credit unions used for sending and receiving electronic payments and money transfers. The ACH network is operated and governed by the National Automated Clearing House Association (Nacha), an independent organization of banks, credit unions, and payment processing companies.

ACH payments are a highly flexible way to send and receive funds for a wide range of uses. In 2024, there were more than 33.56 billion payments made through the ACH network, totaling $86.2 trillion transferred, a growth of 7.6% year-over-year.

Types of ACH payments

ACH direct deposit

Referring to any kind of transfer from a government entity or business to a consumer, an ACH direct deposit allows employers to transfer payroll funds directly into their employees’ bank accounts. According to Nacha, nearly 92% of US workers receive their paychecks via ACH direct deposit.

Other types of direct deposits:

• Employer-reimbursed expenses
  
• Government benefits
  
• Tax refunds
  
• Annuity payments
  
• Interest payments
  

ACH direct payments

Direct payments allow consumers and businesses to issue payments directly from their bank accounts. These payments can be used for anything from paying bills to buying goods and services.

ACH vs. EFT: What’s the difference?

The terms ACH transfers and EFT are not interchangeable, but they are strongly related. ACH transfers are a type of EFT, and EFTs include ACH transfers but are not limited to them.

There are additional differences between ACH payments and other types of EFTs:

• How they’re processed: While wire transfers are processed individually in real time, ACH transfers are settled in batches. Every transfer request that comes into the ACH network joins a queue; several times during business days, the transfers in this queue are processed together.

• Transfer speed: Some EFTs, like digital wallets, ATM transactions, and debit card payments, are authorized and completed within a few seconds. Wire transfers typically take anywhere from a few hours up to two business days. ACH payments are generally considered to take longer than wire transfers, but updates to Nacha’s operating rules in the past few years have greatly expanded access to same-day ACH transfers.

• Cost: EFT costs and fees vary considerably, depending on the type of EFT, where the transfer is originating from, where the transfer is heading, and the amount of money involved. ATM transactions and payments sent using peer-to-peer apps usually carry per-transaction fees of just a few dollars, whereas international wire transfers can cost as much as $50 per transfer. Some ACH transfers are free, and some cost a few dollars.

• Geographic reach: One of the most significant differences between these methods is where they can move money. While ACH transfers are primarily restricted to transactions within the United States, other EFT types, such as wire transfers, use the global SWIFT network to reach nearly any bank account worldwide. This makes wire transfers the standard for cross-border payments, while ACH is the preference for high-volume domestic payments.

The differences between types of EFTs speak to the expansive range of products and services that falls under this umbrella term. Understanding the various options available for transferring funds will help you make smart, practical decisions about which type of EFT is the ideal vehicle for your payment needs.

ACH vs EFT: Deciding what’s best for your business

Selecting the right method depends on your business’s specific needs for speed, cost, and security. While all ACH payments are EFTs, not all EFTs are ACH. For certain kinds of payments, an EFT besides ACH might be the best bet.

• High-volume, domestic transfers: If you process a lot of recurring domestic payments like employee payroll or monthly subscriptions, then ACH might be the best choice. Because these are processed in batches, the cost per transaction is significantly lower than other electronic methods.

• Cross-border commerce: If you need to move money across borders, and especially large sums of money, then EFTs like wire transfers are the global standard. While ACH is primarily a domestic network, wire transfers use the SWIFT network to reach international banks quickly and securely.

• Real-time retail payments: If you operate a storefront or ecommerce site where customers expect to leave with a product immediately, then EFTs like debit card transactions are the best choice. Unlike ACH, which can take days to clear, debit transactions provide an instant “approved” or “declined” status at the point of sale.

• Urgent, high-value transactions: If you are closing a real estate deal or making a major vendor payment that must be finalized today, a wire transfer is the preferred EFT. ACH payments can be reversed in some instances and take longer to settle, whereas wire transfers are generally considered cleared funds as soon as they hit the recipient's account.

• Flexible person-to-person payments: If your business model involves quick reimbursements or gig-style payouts to individuals, peer-to-peer (P2P) EFTs are often more convenient than ACH since they typically bypass the need to provide sensitive bank information.

FAQs about ACH payments and EFT transfers

How Stripe Payments can help

Stripe Payments enables businesses to set up and accept 125+ payment methods, including ACH Direct Debit. It provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Simplify verification: Instantly verify ACH Direct Debits or send microdeposits to verify customers’ bank account details within 2 business days.

• Simplify refunds: Make refunds or return excess funds to the customer.

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs and Link, Stripe’s digital wallet.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.

• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.