Difference Between EFT and ACH (With Table)

A computer and a network are used to send money from one account to another via electronic payments (EFT), and it has nothing to do with printed documents. Some options include direct deposits, electronic payments, automated teller machines (ATMs), debit and credit cards, or e-checks.

Financial institutions use the automated clearing house (ACH) to settle and clear electronic funds. Transferring funds electronically between two or even more financial institutions has never been easier than it is now, thanks to this initiative. Both direct deposits and direct payments are accessible for use.


The main difference between EFT and ACH is that it concerns electronic financial transfers. EFT is an abbreviation for Electronic Fund Transfer, while ACH is for Automated Clearing House. In addition, EFT is the term used to refer to the quick transfer of money from one account to another, whereas ACH is the term used to refer to the electronic settlement of all transactions between two bank accounts.

When compared to ACH, EFT is significantly faster. On the other hand, ACH must establish connections with several banks, which takes time.

EFT – The simplest definition of an EFT is any transfer of money from one account to another via the use of technology. Electronic funds transfers (EFTs) comprise both ACH and Wire Transfer services. Because EFT is a word that includes a variety of various sorts of financial transactions, ACH transfers are often referred to as electronic funds transfers (EFT).

ACH – The Automated Clearing House (ACH) is the most widely used money transmission mechanism. Automatic Clearing House (ACH) is an electronic connection used by banking firms to handle transactions in batches. ACH is an abbreviation for Automated Clearing House. The usual ACH transfer takes a few days to process and clear the recipient bank institution. This is because it requires the setup and confirmation of the receiving party.

Comparison Table Between EFT and ACH

Parameter of ComparisonEFTACH
MeaningWithin a banking unit or network, the movement of money between accounts.  Financial transactions between many banks or networks.  
ScopeThis only applies to a single bank or branch network.  It involves a wide range of financial institutions, networks, and units.
TimelinesInstantly and usually within a few minutes, it happens.  Finalization takes between 24 and 48 hours. Many networks and substantial financial investment have gone into this.  
ApplicabilityIdeal for routine financial activities like sales, purchases, money transfers between accounts, and withdrawals.  Valid only for exchanging securities for the settlement of debts between banks & other financial organizations.  
Instruments usedTransfer money with the help of electronic means such as direct deposit, checks sent through email or fax, and wire transfers.  To implement, the system relies on direct deposits & direct payments.  

What is EFT?

Electronic fund transfers (EFTs), as previously stated, do not necessitate the use of paperwork or the intervention of bank workers to transfer funds through one bank account to a different.

Depending on the circumstances, these transfers may occur within a single financial system or across many banking systems. Most of the time, computer-based systems are employed to attain this goal. In addition, these transfers are typically completed instantly because the results are automatically reported on either party’s account as soon as they are completed.

Electronic financial transfers have become increasingly popular since it is safer, more convenient, and faster than traditional methods. Examples include the withdrawal of monies from an automated teller machine or transferring funds into a client’s account using a direct deposit system.

What is ACH?

A facility known as the Automated Clearing House (ACH), as the name implies, is responsible for clearing and settling all financial transactions that take place among the various financial institutions.

The clearing is responsible for updating accounts and making arrangements for the eventual transfer of cash and securities between parties. On the other hand, it is the accurate exchange of monies in exchange for securities when it comes to settlement. The automated clearinghouse is so named because it, like the automated clearinghouse, does not require any paperwork or human participation.

Every transaction is electronically through computers and accompanying software applications, including payment processing. The automated clearinghouse in the United States is operated by the National Automated Clearing House Association (NACHA).

Main Differences between EFT and ACH

  1. Transferring money electronically between bank accounts is known as electronic funds transfer (EFT). For electronic transaction exchange between two or even more financial institutions, an ACH is a better option than TWAIN.
  2. Banks only use EFT, and it only transfers funds between accounts within the same bank. On the other hand, ACH transports funds between two or more banks. Thus, the latter is more general.
  3. Several tools are required to implement electronic financial transfers, and included are electronic checks and direct deposits. The ACH, on the other hand, uses only two.
  4. Because Electronic fund transfer transactions are mainly conducted within a single financial institution, they are relatively speedy. As a result, they are free of the delays associated with other financial transfers. The ACH, on the other hand, takes longer because it involves multiple financial networks.
  5. The EFT transactions come in, speeding up the transfer and settlement processes. In the ACH, transactions are grouped and then processed. This is why the process is too long.
  6. EFT is mainly done within a bank unit or network, and it is safer since banks can check the processes and systems. The ACH, as stated previously, occurs across networks. Unauthorized access is thus likely. Controls EFT activities are overseen and monitored by the banks who own the networks that process the transactions. On the other hand, an ACH must be scrutinized and regulated by a statutory body. Why? Because no single bank owns it and its transactions are often too large.
  7. Both types of e-transfers charge the user some fee. However, prices vary widely. For smaller amounts and inside a banking network, EFT is cheaper. The more vast bureaucracy and more considerable sums required in ACH entail additional fees.
  8. Because of the constraints of a financial system or network, bank account holders rely on electronic funds transfer (EFT). Transferring funds between accounts or other account holders is how they take advantage of the service. Banks solely use the ACH to transfer funds.
  9. The EFT can only be used within a country’s borders, and those facilitated by the ACH may occur both within and outside a country.


WOW! You now know to make an informed decision about cash transfers if & when you need to shift money from one bank account to another in the future.

As you can see, the electronic clearinghouse will only intervene if the transaction in question requires the transfer of funds over more than one banking system or border. As a result, you may not be able to use it all of the time.


  1. https://search.proquest.com/openview/56d363e7d98a5f51145c99fb013e9dce/1?pq-origsite=gscholar&cbl=27768
  2. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/usflr13&section=32