Understanding the Difference Between ACH and EFT Payments

Understanding the Difference Between ACH and EFT Payments

When businesses accept electronic transactions, they save time and money compared to paper-based methods like checks. ACH payments are cheap and convenient for customers and finance teams alike.

However, it’s essential to understand the differences between ACH and EFT payments. While they move money electronically, some key differences can affect transaction speeds.


ACH and EFT payments are digital forms of moving money from one account to another. They both aim to reduce the cost of transactions by eliminating the need for paper documents and enabling consumers and businesses to save on processing fees. They are also both considered secure transaction methods.

Generally speaking, ACH payments are the cheapest of the two options for consumers and businesses. However, that depends on the specific payment types in question. For example, if you need to process large payments, it may make more sense for your business to use other kinds of EFTs, such as wire transfers, which can handle higher-value transactions.

ACH transactions are generally made through the Automated Clearing House network of banks. It’s a national network that links nationwide financial institutions to facilitate electronic commerce. It’s a system that tallies all the transactions it processes during the day and then sends the correct information to each bank for them to complete the transfer on their end.

ACH payments are commonly used for direct deposits, such as paychecks or tax refunds. But they’re also widely used in subscription and repeat billing situations such as gym memberships, utility bills, insurance payments, etc. Consumers may also use ACH payments via online banking portals, PayPal, or Venmo to send money to friends and family or with mobile apps to pay freelancers or contractors.


As you research the best payment methods for your business, you can easily understand the significant differences between transaction types. Specifically, EFT vs ACH payments can seem similar, but there are substantial differences in cost, speed, security, and transfer limits. Understanding these differences is critical to making the right decisions for your business.

ACH payments are generally processed in batches and can take a few days to reach the recipient’s account. ACH transactions are sent through the Automated Clearing House, where funds are cleared twice daily. In comparison, credit and debit card payments, e-wallet payments, and mobile payments are typically processed within seconds and settled in one or two business days.

EFTs are an umbrella term for any transaction that uses technology to move money between corresponding banks or financial institutions. This includes direct deposit to online bill payments and ATM withdrawals. Generally, EFT transactions don’t involve human contact and are completed using computer systems instead of paper checks or cash.


You’re making an EFT payment if you use your debit card to pay for an online purchase or get your biweekly paycheck directly deposited into your bank account. EFTs, or Electronic Fund Transfers, are an umbrella term encompassing every transaction that uses technology to move money from one account to another. This includes ATM withdrawals, credit and debit card payments, eWallet transactions like direct deposit, and ACH transfers.

In addition to the convenience of EFTs, there are many additional benefits. EFT payments are more secure than cash or paper checks and offer faster processing times. Because of this, businesses are increasingly adopting these types of payment methods.

An intelligent business payments solution that offers ACH and EFT payments can help businesses save time on accounts payable by automating invoice and bill payment processes. This means that instead of a company sending out an amount manually, it can automatically receive monthly compensation from its customers.

Whether you’re sending or receiving an ACH payment, it’s essential to understand how these transactions work to avoid any potential problems. Every ACH payment begins when a request is sent to an ACH network. This network gathers all these requests and then sends them to each bank in a queue, which is processed in batches several times daily.

Transfer Limits

Many customers stopped carrying cash and checkbooks long ago, so it’s no surprise they’ve also begun relying on electronic payments. But, not all electronic payment methods are created equal, with different types offering different costs, speeds, security, and transfer limits.

ACH, or Automated Clearing House, is an extensive network of banks and financial institutions allowing financial transactions in the United States. This includes transferring funds between banks, paying bills, and sending money to friends and family via apps.

These transfers can take place in one of two ways: ACH credit or ACH debit. ACH credit transactions allow for money to be “pushed” into other accounts (like those of friends and family). Alternatively, ACH debit transfers let companies pull what they owe from your bank account.

Regardless of the type of transaction, most ACH transactions must be done by a specific cutoff time to avoid incurring a fee. Additionally, most ACH transactions are subject to a daily or monthly limit set by the individual bank.

While these limitations are in place, it’s worth noting that many of them can be circumvented by building a solid relationship with your bank. If you’ve been a customer for years, keep your account balance positive, and don’t rack up fees often, your bank may be more inclined to increase your ACH transfer limit.

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