11 Difference Between EFT and ACH (With Table)

The advancement in technology has made forms of payment to be more efficient. We have seen a rapid decline in personal check writing.

This advanced technology also happens to be the reason behind the booming electronic payment industry. Research shows that over 80% of Americans embrace digital transactions today.

The main forms of digital payment are Electronic Funds Transfer and Automated Clearing House. These payment methods have reduced the hassle of writing checks and sending direct deposits.

So, what is the main difference between EFT and ACH? The former refers to the transfer of funds from one bank account to another instantly while the latter refers to the settlement of all transactions of two bank accounts electronically.

This article provides further differences between electronic funds transfer and automated clearing house in a tabular form. Take the time to read through it and understand how these digital payment forms work.

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Comparison Table (EFT Vs ACH)

Basic Terms EFTACH
DescriptionIt is a digital payment method where money is transferred from one bank account to another directly.It is typically an electronic clearing and settlement system.
Stands forElectronic Funds TransferAutomated Clearing House
ScopeApplies strictly within one bank unit.Involves numerous banking units, institutions, and networks.
DurationTake less than one minute. It is an instant money transfer.Transactions take 24-48 hours to be complete.
ApplicationIdeal for undertaking day-to-day business transactions.Ideal for settling dues between banks and other financial institutions.
Instruments UsedDirect deposits, wire transfers, ATMs, debit cards, and electronic checks.Recommend direct deposit and direct payment only.
PopularityLess famousMore famous
CostLess expensiveMore expensive
SecurityInsecure since their no verification of informationHigh secured since there is verification of information.
Type of PaymentePayment since it is done completely online.Electronic payment with manual verification of information.

What Is EFT Payment?

EFT stands for Electronic Funds Transfer. It is an electronic transfer of funds from one bank account to another directly without involving bank employees.

There is no paperwork involved since transactions are done completely online. Keep in mind that EFT takes place within accounts of the same bank or across multiple banks.

Examples of EFT are wire transfers, ATMs, direct deposits, debit, and credit cards. The digital payment method is ideal for carrying out day-to-day transactions.

The type of payment is more convenient and instant when compared to the automated clearing house method. The only drawback is that it is less secure.

What Is ACH Payment?

ACH stands for Automated Clearing House. The digital payment method entails clearing and settling all transactions that involve different banking institutions.

Clearing updates accounts and making arrangements for the subsequent transfers of cash and securities. The settlement involves the actual exchange of funds for securities.

The good news is that the automated clearing house payment form does not require human intervention or paperwork to take place.

Computers and associate programs help to facilitate automated clearinghouses. This digital payment form in the United States of America is run by the National Automated Clearing House Association.

Main Difference between EFT and ACH

  1. EFT stands for Electronic Funds Transfer. ACH stands for Automated Clearing House.
  2. EFT involves the transfer of funds from one bank account to another either within the same bank or across other banks. ACH facilitates exchange of transactions between two or more financial institutions.
  3. EFT is utilized by banks only. ACH involves the transfer of funds across two or more banks at a time.
  4. EFT entails direct deposits, wire transfers, ATMs, debit, and credit cards. ACH entails direct deposits and direct payment.
  5. EFT transactions are faster and instant. ACH transactions take 24-48 hours to be complete.
  6. EFT transactions are processed as they come. ACH transactions usually pile up in batches.
  7. EFT happens within a country’s border. ACH happens both within and outside the country’s border.
  8. EFT is used by account holders of the bank. ACH is used by banks only to move funds among themselves.
  9. EFT has no levy fees making it affordable. ACH has fee levies making it expensive.
  10. EFT has governed and overseen by the bank that owns the network. ACH is scrutinized and regulated by relevant authorities.
  11. EFT is more reliable than ACH in terms of convenience.

Frequently Asked Questions

Is EFT the Same as Direct Deposit?

Not really. EFT involves the transfer of funds electronically while direct deposit involves both electronic transfer and manual deposits.

How Long Does It take for an EFT payment to go through?

It is usually instant. The digital takes less than one hour for the money to reflect into your bank account. But there are instances it might take up to 24-72 hours.

Do Banks Charge for Electronic Funds Transfer?

Some banks do not charge while others do. Transfers of funds within the same bank to another account do not attract levy fees.

In Conclusion

Technological advancement has helped in facilitating paper-free banking institutions. Many Americans have embraced the use of these digital transfers of funds.

These online payments are more secured and convenient. The main difference between ACH and EFT is that ACH is the oldest digital payment method while EFT is the newest ePayment form.

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