ACH vs. EFT: The Key Differences

 Understanding ACH vs. EFT can help your business take the right payment types. Learn how they work and what you can expect with ACH and EFT as a merchant.

Even though many people use the terms ACH and EFT interchangeably, they’re not the same. ACH payments are just one of many types of electronic fund transfer (EFT). 

Understanding how EFT and ACH work and where they differ can help you determine whether your business should accept these payment methods.


What Are ACH Payments?

An ACH transaction moves money between financial institutions when someone makes a purchase. ACH stands for Automated Clearing House, the network that facilitates these transfers. Examples of ACH payments include:

  • Payroll direct deposit
  • Automatic bill payments
  • Social Security and other government benefits

Your ecommerce shop can accept ACH payments at checkout. If your customer selects this option, the money will transfer from their bank account to yours with the help of the ACH network.

How Do ACH Payments Work?

ACH connects all the banks, credit unions, and financial institutions in the U.S. It sends payments between these institutions in several batches throughout the business day. Global ACH payment processing takes place through associated networks such as Single Euro Payments Area (SEPA), which serves the European Union. 

Once the customer's bank account sends a payment through the ACH network, it could take another day or two for the money to show up in your merchant account. 

The National Automated Clearing House Association (NACHA) ensures the security of ACH transactions. NACHA has a detailed verification process, so ACH payments are safer than credit cards.

What Are EFT Payments?

EFT describes all payments that take place through digital networks, including:

  • Transactions with digital wallets like PayPal
  • Wire transfers
  • ATM withdrawals
  • Direct paycheck deposits
  • Online bill payments
  • Ecommerce transactions
  • Pay-by-text systems

More than 82% of Americans use EFTs each year, so they're by far the most common payment method in the US. ACH payments fall under the umbrella term of EFT, but not all EFT payments use the ACH network.

In the US, the federal Electronic Funds Transfer Act (EFTA) provides consumer protection from EFT fraud. EFTA applies to most EFTs including ACH payments, but not to wire transfers.

How Do EFT Payments Work?

EFT payments don't require manual authorization, so they usually go through right away or within a few minutes. The customer authorizes the transaction by entering a secure password or PIN for contactless payments. They can also present a physical credit card for in-person EFT purchases. 

You'll get a notice from your payment services provider when someone uses an EFT at your online store. This receipt will also indicate whether the funds have arrived or the transaction remains pending. 

Under federal law, companies that accept electronic credit and debit card transactions must adhere to PCI DSS. has Level 1 PCI DSS compliance, so when you choose us as your payment service provider, we save you the hassle of having to meet the requirements on your own.

The Main Differences Between ACH and EFT

Scope is the main difference between ACH and EFT payments. EFT is a broader term that applies to all types of electronic payments. ACH is one distinct subtype of EFT, referring only to payments that take place through the ACH network. 

While most EFT payments transfer immediately, ACH transactions take longer. That's because ACH payments go through in batches while EFTs go through one-by-one in real time. On the other hand, ACH payments usually have lower fees than other forms of EFT. Both methods take less time than traditional paper checks. 

Most EFT payment methods provide an immediate decline if the customer's account can't cover the transaction. ACH payments may go through even if the account has insufficient funds, but the customer's bank will reverse the charges within a few days.

ACH transactions also add an extra processing step. EFT payments can go straight from one bank to another or between two accounts within the same bank. ACH payments also transfer between banks, but they go through the Automated Clearing House network along the way.

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The Bottom Line

You can increase conversions and sales by accepting multiple payment methods, including EFTs like ACH payments and digital wallet transactions. EFTs offer a secure, cost-effective way to take payment for your products and services. Although ACH payments are slower than many other forms of EFT, they also have an extra layer of security. makes it easy to accept your audience's preferred payment methods. You can take many types of EFT including digital wallets, as well as debit cards, credit cards, bank transfers, and more. 

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What's the best way for a business to accept online payments? is the best way for your business to accept ACH and EFT transactions as well as other payment methods. You'll be able to take digital wallet payments, debit cards, credit cards, and other popular options. We handle everything behind the scenes so you can focus on running your business.

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What's the main difference between EFT and ACH?

Scope is the main difference between EFT and ACH payments. EFT covers all types of electronic fund transfers, a category that includes ACH. ACH is a smaller subcategory within EFT. It refers to bank transfers that take place through the Automated Clearing House network.

What is the difference between EFT and bank transfer?

A bank transfer is just one type of EFT. Banks and financial institutions transmit funds through digital EFT networks. Digital wallets that operate outside traditional banks also provide EFTs.

digital EFT networks. Digital wallets that operate outside traditional banks also provide EFTs. Is EFT a wire transfer or direct deposit?

Wire transfers and direct deposits are both different types of EFTs. A wire transfer goes from one bank account to another bank account and usually occurs immediately. Customers can send domestic or international wire transfers.

Direct deposits are a type of ACH, another EFT subcategory. The money takes a few days to transfer with a direct deposit. Payroll payments are the most common example.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
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