ACH vs EFT: What’s the difference?

ACH and EFT are two of the most popular payment methods among merchants, but ACH is still not widely known and EFTs aren’t always ACH. A solid understanding of ACH and how it works will help you decide which payment method is right for you.

ACH stands for Automated Clearing House, which processes ACH debit and ACH credit payments. ACH is an electronic network that allows for the transmission of information in bulk, like direct deposit or payroll. ACH transfers are not real-time; due to the massive volume of ACH transactions, ACH settles several times during each business day (typically at least once each night).

ACH transfers are also drawn from a specific source of funds, which can have a big impact on ACH returns and ACH disputes.

ACH vs EFT: What’s the difference?

ACH transactions occur over a network, while credit and debit card payments typically require an actual transfer of money. ACH is strictly regulated at the federal level by the National Automated Clearing House Association (NACHA). ACH transactions are originated by ACH debit, ACH credit or ACH electronic payments. ACH credits are ACH entries that involve money transfers from accounts you own into accounts of another individual or company.

ACH debits are ACH entries that transfer money out of your accounts into the account of an ACH company or individual. ACH debits are typically associated with electronic transactions like electronic check conversion, direct deposit and payroll ACH debit, though they can also be for ACH credit entries like ACH returns/refunds, ACH chargebacks or ACH payment agreements.

ACH entries, both credits and debits, incur ACH processing fees. ACH returns/refunds are ACH credits sent by the receiving ACH company or individual as a refund to an ACH debit entry. ACH chargebacks are ACH debits that occur when a customer disputes a transaction with their bank or credit card issuer ACH ACH payment agreements are ACH debits that occur when a customer authorizes ACH returns/refunds or ACH chargebacks.

ACH vs EFT: Conclusion A merchants’ choice of payment method should be driven by the kind of businesses they run, their customers and the fees associated with each ACH entry type. ACH transactions ACH transfers ACH entries ACH debits ACH credits ACH returns ACH chargebacks ACH payment agreements are made by individuals or companies who allow their bank account to be used for ACH processing.

EFTs Electronic Funds Transfers are real-time direct transfers of money from one bank account to another, whether ACH or EFT. A merchant’s ACH vs EFT decision will be driven by the kind of businesses they run, their customers and the fees associated with each ACH entry type.

ACH transfers can take up to three business days to process, while ACH credit transactions typically happen within one business day. On the other hand, ACH transfers ACH entries ACH debits ACH credits ACH returns ACH chargebacks ACH payment agreements and ACH credit transactions settle on the same business day they’re initiated.

A merchant who needs an immediate transfer of funds from a customer’s bank account to their own can access those funds via EFTs. ACH transfers ACH entries ACH debits ACH credits ACH returns ACH chargebacks ACH payment agreements are completed in bulk, which means that the transmission of data is automated and typically done once per night.

EFT transactions take place during business hours (typically 9:30 am to 5 pm Monday through Friday), ACH ACH transfers ACH entries ACH debits ACH credits ACH returns ACH chargebacks ACH payment agreements are typically available 24 hours per day, 7 days per week. A merchant accepting EFTs must be open during business hours to process those transactions .