10 Difference between EFT and ACH (With Table)

What is the main difference between EFT and ACH? EFT stands for electronic funds transfer while ACH stands for automated clearing house. EFT is ideal for transfer of funds from one bank to another while ACH connects different banks.

Advancement in technology has result in rapid change in information and communication. Most banks have opt for e-banking culture to enhance better and flexible products or services to the customers. ACH and EFT are the most commonly used.

Understanding the differences between ACH and EFT can be challenging for some people. We wrote this post to explain the difference between EFT and ACH withdrawal, transfer, and more for better understanding.

Difference between EFT and ACH with Table

Basic Terms EFT ACH
Definition Electronic movement of funds from one bank account to another within the same financial institution or different institutions. A network-based system for batch processing financial transactions between banks and financial institutions.
Transaction Types Covers various types of electronic transactions, including wire transfers, card payments, and mobile payments. Primarily used for batch processing direct deposits, payroll, bill payments, and other repetitive transactions.
Speed Typically allows for real-time or near-real-time transactions. Transactions are processed in batches, which may take 1-2 business days.
Flexibility Offers flexibility in transaction types, timing, and processing, including immediate transfers. Suited for recurring, scheduled transactions and bulk payments.
Authorization May require authorization for each transaction, particularly in retail settings. Often relies on pre-authorized agreements for recurring transactions.
Transaction Costs Costs vary depending on the service provider and transaction type. Typically involves lower transaction fees compared to other payment methods.
Use Cases Used for various purposes, including retail payments, online shopping, and interbank transfers. Commonly employed for payroll, vendor payments, tax refunds, and subscription billing.
Regulatory Oversight Governed by various regulations and may require compliance with different rules for specific transactions. Subject to specific ACH rules and regulations, ensuring standardized processes.
Settlement Mechanism Can involve immediate settlement between parties or deferred settlement through clearinghouses. Uses a clearing and settlement process where transactions are grouped and settled in batches.
User Base       Widely used by consumers, businesses, and financial institutions for various payment needs. Primarily used by businesses and government entities for bulk payments and payroll processing.

What Is EFT?

Electronic Funds Transfer (EFT) is a broad financial technology that enables the electronic exchange of money between different bank accounts or financial institutions.

EFT encompasses a wide range of digital payment methods and transactions, allowing individuals, businesses, and institutions to transfer funds electronically, securely, and efficiently.

EFT transactions include various forms of electronic payments, such as wire transfers, online banking transfers, mobile payments, debit card transactions, and electronic check payments.

These transactions can be conducted within the same financial institution or between different banks, and they often involve the use of digital networks and secure protocols to facilitate the transfer of funds.

EFT offers convenience and speed, making it suitable for various purposes, including online shopping, bill payments, salary deposits, and more.

It has become an integral part of modern banking and commerce, providing individuals and businesses with the ability to manage their finances and conduct transactions electronically, reducing the reliance on physical currency and checks.

What Is ACH?

Automated Clearing House (ACH) is an electronic payment system in the United States that facilitates the secure and efficient transfer of funds between financial institutions. ACH transactions are batch-processed, meaning they are collected and settled in groups rather than individually.

The ACH network serves various purposes, including direct deposits of payroll and government benefits, electronic bill payments, business-to-business payments, and person-to-person transfers.

ACH transactions are typically initiated through methods like online banking, where users provide their bank’s routing number and their account number to authorize fund transfers.

ACH transactions offer advantages such as lower transaction costs and the ability to automate recurring payments.

The ACH system is governed by specific rules and regulations set by the National Automated Clearing House Association (NACHA), ensuring standardized and secure electronic fund transfers.

It plays a crucial role in modern financial transactions, making it a fundamental component of the U.S. banking and payment infrastructure.

Main Difference between EFT and ACH

  1. EFT, or Electronic Fund Transfer, involves digital money transfers between bank accounts, whether they are within the same or different banks. In contrast, ACH stands for Automated Clearing House, serving as a clearing and settlement system for processing electronic transactions among depository institutions.
  2. EFT prioritizes the secure, convenient, and safe transfer of funds directly between bank accounts, while ACH connects banks and financial institutions nationally to facilitate monetary transactions.
  3. Transferring funds via EFT is typically faster compared to ACH, as ACH processes transactions in batches, causing delays, whereas EFT allows for real-time or near-real-time settlement.

Similarities between EFT and ACH

  1. Both EFT and ACH are electronic payment methods.
  2. They enable the transfer of funds between different bank accounts.
  3. Both are widely used for various financial transactions.
  4. They provide convenience and reduce reliance on physical payment methods like checks.
  5. EFT and ACH transactions are subject to regulatory oversight and security measures.


In conclusion, the distinction between EFT (Electronic Fund Transfer) and ACH (Automated Clearing House) lies in their specific roles within the realm of electronic financial transactions.

EFT is a broader term encompassing various digital payment methods, focusing on the secure transfer of funds between bank accounts, whether within the same or different banks.

In contrast, ACH is a specialized system designed for the batch processing of electronic transactions between depository institutions, serving purposes like direct deposits, bill payments, and business transactions.

While both systems offer electronic payment solutions, they differ in their scope, speed, and functionality. EFT provides immediate or near-real-time fund transfers, making it suitable for various individual and business needs. ACH, on the other hand, excels in processing bulk transactions efficiently, albeit with a longer processing time.

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