Difference between wire and ACH trnasfer

Recently in a big real-estate transaction I made a big mistake by transferring the closing cost in the wrong method. On our online banking page, there are three options: two business days, next business day, and same business day. Since I figured that the fund only need to arrive the next day, I pick the next day option to save a couple bucks without knowing that they are actually using different transfer method. The two business and next day transfer use ACH transfer and same day transfer uses wire transfer. Apparently, real-estate transaction only accepts funds via wire transfer because that is the only certified way to transfer money. So the closing agent never receive the fund and we almost fail to close the deal.

So what is the difference between ACH transfer and wire transfer? I did a little research and here is a summery that I come up with:




ACH Transfer (Automated Clearing House)

1. Bank transfer funds to another bank through a third party clearing house.
2. The funds are transferred as batches so the cost is lower.
3. Transfer can take days also because they are transferred as batches.
4. Also used in online bill pay, depositing checks, and using debit cards.

Wire Transfer

1. Transfer happens immediately.
2. Directly from bank account to bank account.
3. More expensive because each transaction is handled individually.
4. Both account holder, fund amount are verified. Hence more secure.
5. Cash Wire Transfer (e.g. WesternUnion) can be dangerous though. Because sender and receiver are not verified by the bank.

Online banking website sometime mixed these method so it is very easy to use the wrong method if you are making some important transactions. (well... at least for me) So hope these mistake won't happen to other people.

Source: http://www.depositaccounts.com/blog/difference-between-wire-transfer-and-ach.html

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