ACH Transfers vs SWIFT Payments: What's the Difference?
What's the difference between ACH and SWIFT? Although they're both types of electronic payments, understanding the difference can be crucial to your overseas money transfer.
These days, there's no denying that technology is on steroids, and this has reshaped the international payments landscape. ACH and SWIFT are two of the most common examples of how intelligent automation can deliver better value through the convenient, fast and smooth transfer of funds from one account to another.
It's worth knowing the key differences between these electronic fund transfer methods, which we will discuss below.
What is ACH?
ACH stands for Automated Clearing House, a payment system that connects banks and has proven to be increasingly popular. According to the Administrator of the ACH Network, NACHA¹, payment volume across this system grew by at least 1 billion yearly in seven consecutive years leading up to 2020.
Here are the main details to know about ACH transfers:
• How do ACH transfers work?
ACH transfers are initiated via a financial institution. When you initiate a transfer, it joins a queue of other similar transfers. The Automated Clearing House network processes these transfers as a batch later. The money is then allocated to the appropriate account by the receiving bank.
• What are the types of ACH transfers?
The two types of ACH payments are credit transfers and direct debits. Credit transfers occur when you initiate the transfer. In contrast, debit payments are initiated by the receiver of funds, like when a service deducts money from your account for a bill payment.
• How long does the payment process take?
Delivery of funds usually takes between 1-2 days, though there may be delays due to incomplete paperwork. You'll need details, such as your name, payment amount, bank routing number and account number, to send an ACH payment.
• What are the advantages of ACH?
ACH payments provide a more straightforward, cost-effective and convenient way of transferring funds electronically. They are versatile and work for direct deposits, direct payments and personal or business transfers. Additionally, ACH payments are faster, safer and more secure since transactions can be reversed.
• What are the disadvantages of ACH?
ACH payments are not instant, making them unsuitable for urgent transactions. ACH payments involve batch processing, so it takes time before the delivery of funds. Also, keep in mind that some banks in different countries might not have a clearing house to facilitate international ACH transfers.
What is SWIFT?
SWIFT refers to The Society of Worldwide Interbank Financial Telecommunication, a Belgian² financial network that facilitates global payments. SWIFT provides a messaging platform banks and financial institutions use to make cross-border payments.
Here are more details:
• How do SWIFT payments work?
SWIFT uses unique identification codes to transfer monetary information between financial organizations. The SWIFT network and messaging platforms enable financial establishments to communicate transaction details to one another when making international wire transfers. This facility is used globally and encompasses over 200 countries and thousands of financial institutions.
• What are the advantages of SWIFT?
Swift payments occur over a highly secure electronic network to ensure confidentiality. In addition, every SWIFT payment is accompanied by transaction details, making it easier to track. SWIFT payments are also ideal for time-sensitive transactions, though same-day transactions cost more.
• What are the disadvantages of SWIFT?
SWIFT payments carry additional costs if the payment has to be processed through intermediary banks. The risk of delays is also high with payments processed this way. Additionally, payments can't be reversed once received.
ACH vs. SWIFT: A quick comparison
Here's a summary of the main differences between ACH and SWIFT:
How it works – ACH is an electronic monetary network that connects banks. SWIFT is an electronic money transfer network that enables financial institutions and banks to send money from one bank account to another globally.
What it costs – ACH payments are usually more cost-effective, whereas transferring SWIFT payments internationally carries a higher charge.
How long it takes – ACH payments tend to have a lower transfer speed than SWIFT payments. However, there may be delays with SWIFT payments if more intermediary banks are involved.
Who uses it? – Although international ACH payments are possible, ACH is commonly used for domestic payments, while SWIFT payments are more suitable for international payments.
Enjoy simpler overseas money transfers with MTFX
Knowing your options for electronic funds transfer is worthwhile if you want to simplify how you send money abroad. It helps you choose the best international payments service for your needs.
If you need to make an international money transfer, MTFX is your one-stop shop for cheap, fast and secure transactions. Sending money abroad has never been easier with our currency experts helping you explore your payment options.
By turning to a specialist international money transfer service instead of your bank, you can enjoy competitive exchange rates 3-5% lower than your bank. Our transfer fees are also much lower, so you can enjoy increased savings.
Here are more reasons to use MTFX:
Efficient delivery times of 1-2 days
A wide range of foreign exchange tools
A 24/7 secure, online platform accessible from anywhere
Industry-leading automation technology for smooth transfers
Register your account with MTFX today to enjoy secure, cost-effective and efficient international money transfers.
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Who can use the MTFX payment service?
Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into.
Personal clients usually use our services to transfer money between their own accounts in two different countries.
Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
Why should I use MTFX and not my own bank?
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands.
We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world.
Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
How do customers send funds to MTFX?
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
How long does it take MTFX to transfer funds?
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.
Please read the following update before logging in to your MTFX online account
We have updated our online dealing system to provide you with better functionality, more unique tools and an overall enhanced client experience. MTFX Online 2.0 is now available for your dealing needs. You can begin using our enhanced online portal today.
Please note that the traditional portal will be available for use until MAY 30th 2021 at which point it will be decommissioned.