ACH Transfers vs SWIFT Payments: What's the Difference?

When it comes to sending money electronically—especially across borders—two major systems often come up: ACH and SWIFT. While both methods are widely used for transferring funds from one bank account to another, they serve very different purposes and operate in distinct ways.

In today’s fast-moving digital world, understanding the difference between these two payment methods is more important than ever. Whether you’re running a business, sending money to family overseas, or managing international investments, choosing the right transfer method can save you time, money, and unnecessary stress.

If you frequently make B2B international money transfers, it’s essential to understand how to do it properly. Knowing whether ACH transfers or SWIFT payments are the right option depends on your specific needs. In this guide, we’ll explain how both ACH and SWIFT payments work, highlight the advantages of each, and help you determine when to use one over the other—so you can make informed, confident decisions for your business.

What is ACH?

ACH stands for Automated Clearing House, a US-based electronic payment system that enables secure, bank-to-bank transfers across a network of financial institutions. Think of it as the digital backbone behind everyday transactions—like direct deposits, bill payments, tax refunds, and even peer-to-peer money transfers.

ACH is widely used by businesses and individuals alike due to its low cost, security, and efficiency—especially for recurring or scheduled payments. It's particularly popular for domestic transactions within the United States.

How do ACH transfers work?

ACH transfers are processed in batches, not in real-time. When you initiate an ACH transaction—whether you're sending or receiving funds—it gets bundled with other payments and processed by the ACH network at scheduled intervals.

Once processed, your bank (or payment service) sends the funds through the ACH network, and the receiving bank deposits the amount into the target account. This method helps reduce transaction costs and enhances processing efficiency.

What are the types of ACH transfers?

There are two main types of ACH payments:

1. ACH Credit Transfers: You (the sender) push money to another account. For example, employers use this to pay employee salaries via direct deposit.
2. ACH Debit Transfers: The recipient pulls funds from your account. This is commonly used for recurring payments like utility bills or mortgage payments.

How long does the payment process take?

Fund delivery usually takes 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. 

Pros and cons of ACH transfers

Pros of ACH transfers

Cost-effective: One of the most significant advantages of ACH transfers is their low cost. Typically, ACH transfers come with minimal or no fees, especially for domestic transactions, making them an attractive option for individuals and businesses.

Convenient for recurring payments: ACH transfers are ideal for setting up recurring payments, such as payroll, utility bills, and subscriptions. Once set up, these payments are automated, reducing the need for manual intervention and ensuring timely transactions.

Security: ACH transfers are generally secure, as they involve bank-to-bank transactions within a regulated network. Additionally, they require verification steps that help prevent fraud and unauthorized transfers.

Accessibility: ACH transfers are widely accepted across the United States, making them a versatile option for domestic transactions. Most banks and financial institutions support ACH transfers, providing easy access to this service.

Cons of ACH transfers

Slower processing time: ACH transfers can take several business days, especially for transfers initiated over the weekend or holidays. This delay can be a drawback if you need to send or receive money quickly.

Limited to domestic transactions: ACH transfers are primarily used for domestic transactions within the United States. If you need to send money internationally, you'll need to explore other options like SWIFT transfers.

Risk of reversal: Unlike wire transfers, ACH transfers can be reversed in certain situations, such as insufficient funds or fraud. While this feature adds a layer of protection, it can cause delays or complications if the transfer is contested.

What is SWIFT?

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. Based in Belgium, it’s not a payment system but rather a global messaging network that enables banks and financial institutions to securely exchange payment instructions for cross-border transactions.

Think of SWIFT as the international “language” of money transfers—it ensures your money reaches the right destination, even if it has to pass through several banks along the way. The SWIFT network is massive, connecting over 11,000 financial institutions in more than 200 countries. It plays a vital role in international trade, global banking, and personal remittances.

How do SWIFT payments work?

When you send money internationally via SWIFT, your bank creates a SWIFT message that includes all the key details of the transaction—such as sender and receiver info, currency, and amount. This message is sent securely across the SWIFT network to the recipient’s bank.

Each bank involved in the chain—sometimes including intermediary or “correspondent” banks—uses a unique SWIFT/BIC code to identify itself. These codes ensure funds are routed correctly, even across borders and currencies. Here’s a simplified version of the flow:

Your Bank → Intermediary Bank(s) → Recipient's Bank

What are the types of SWIFT transfers?

SWIFT transfers can be categorized into a few different types based on the purpose and the specifics of the transaction:

Bank-to-bank transfers: This is the most common type of SWIFT transfer, where funds are sent directly from one bank to another across international borders. These are often used for personal or business payments.

Corporate payments: Businesses typically use these transfers to pay for international goods and services, settle invoices, or transfer funds between corporate accounts in different countries.

International wire transfers: Similar to bank-to-bank transfers, but often used to describe personal remittances or sending money abroad for personal reasons, such as supporting family members or making purchases.

Spot transfers: These are real-time currency transfers made at the current exchange rate, typically used for urgent payments where the sender wants to lock in a specific rate at the moment of the transfer.

Forward contracts: It is a type of SWIFT transfer that allows you to lock in a specific exchange rate for a future transaction. This tool is especially useful for implementing currency hedging strategies, helping you protect against market fluctuations and save money on international transfers.

Recurring or scheduled transfers: These are automatic transfers set up at regular intervals, often used for recurring payments like salaries or vendor payments in different currencies.

How long does the payment process take?

The payment process for a SWIFT transfer generally takes 1 to 5 business days, depending on factors such as the processing times of the sending and receiving banks, the involvement of any intermediary banks, time zone differences, and currency conversion requirements. Most transfers arrive within 1-3 days, but complex transactions involving multiple banks or less common currencies can extend the process to 5 days. Compliance checks for regulatory purposes may also introduce additional delays.

Pros and cons of SWIFT transfers

Pros of SWIFT transfers

Global reach: One of the primary advantages of SWIFT transfers is their ability to send money internationally. SWIFT connects banks and financial institutions across the globe, making it possible to transfer funds almost anywhere in the world.

Speed for international transfers: While not instantaneous, SWIFT transfers are generally faster than other international transfer methods. Most SWIFT transactions arrive within 1-5 business days, depending on the banks and countries involved.

Security and reliability: SWIFT transfers are known for security, as the network is highly regulated and monitored. Each transaction is tracked and verified, reducing the risk of fraud or errors.

No transaction limits: Unlike other transfer methods, SWIFT does not impose strict limits on the amount you can transfer, making it ideal for large payments or business transactions requiring significant sums of money.

Cons of SWIFT transfers

Higher fees: One of the main drawbacks of SWIFT transfers is the cost. These transfers often come with higher fees than domestic options like ACH, and multiple banks may charge fees along the transfer route, increasing the total cost.

Exchange rate markups: When sending money internationally via SWIFT transfers, currency conversions—such as CAD to USD—are often required. However, banks typically apply a markup to the exchange rate, which means you may not receive the true market rate. These markups can lead to hidden costs that significantly increase the overall expense of your transfer.

Potential for delays: Although SWIFT transfers are generally fast, delays can occur, mainly if the transfer involves multiple banks or countries with different time zones and banking practices. Unexpected delays can be frustrating, especially when timing is crucial.

ACH vs. SWIFT: A quick comparison

When choosing between ACH and SWIFT for transferring money, understanding how each system works—and when to use them—can make a big difference.

1. How they work:

ACH (Automated Clearing House) is a US-based network that processes electronic payments in batches, typically between domestic banks. It's great for everyday transactions like direct deposits, bill payments, and payroll. On the other hand, SWIFT is a global messaging system banks and financial institutions use to facilitate international money transfers. It doesn't move money directly but sends secure payment instructions between parties, allowing funds to be transferred worldwide.

1. Cost differences:

ACH transfers are typically low-cost or even free, especially for personal and recurring domestic payments. That makes them appealing for routine use. SWIFT transfers are more expensive due to international processing fees, intermediary bank charges, and currency conversion costs. It’s common for both the sender and receiver to be charged.

1. Speed of transfer:

ACH payments usually take 1–2 business days to clear, but they can be slower if initiated over weekends or holidays. SWIFT transfers typically arrive in 1–3 business days, but when multiple banks or uncommon currencies are involved, it can take up to 5 business days.

1. Who uses them:

ACH is widely used by individuals, businesses, and government agencies in the United States for domestic payments. While international ACH options exist, they are limited and not universally accepted. SWIFT is the go-to method for international transactions, whether you're a business paying overseas vendors or an individual sending money to family abroad.

Why use MTFX for global payments and international money transfers?

Whether you're a business expanding globally or an individual sending money abroad, MTFX offers smart, secure, and cost-effective solutions to manage your international payments with confidence.

Efficient delivery times of 1-2 days: With MTFX, you can enjoy fast and reliable money transfers, typically completed within 1-2 days. This ensures that your funds reach their destination quickly, helping you stay on top of your financial commitments without delay.

A wide range of foreign exchange tools: MTFX provides a comprehensive suite of foreign exchange tools designed to give you greater flexibility and control over your international transactions. These include spot transfers, forward contracts, and limit orders, allowing you to choose the best option based on your needs. You can also set rate alerts for currency pairs like CAD to GBP, helping you take advantage of favorable market movements and optimize your currency exchange strategy.

A 24/7 secure, online platform accessible from anywhere: MTFX’s online platform is available around the clock, allowing you to manage your transfers anytime. With top-notch security features, you can be confident that your transactions are safe and protected.

Industry-leading automation technology for smooth transfers: MTFX leverages advanced automation technology to streamline the transfer process, reducing errors and ensuring your transactions are processed efficiently and accurately every time.

Simplify money transfers with MTFX

Understanding the differences between ACH and SWIFT transfers is key to choosing the right method for your domestic or international money transfers. ACH is a cost-effective, secure option best suited for domestic payments within the US, while SWIFT is ideal for sending money across borders quickly and reliably. Each has its pros and cons, depending on speed, cost, and destination. MTFX enhances the global payment experience by offering advanced foreign exchange tools, competitive rates, 24/7 secure online access, and automated technology—making international transfers faster, smarter, and more efficient for both individuals and businesses.

Register your account with MTFX today to enjoy secure, cost-effective and efficient international money transfers.

FAQs

1. What is the difference between ACH and SWIFT transfers?

The main difference between ACH and SWIFT transfers is their usage and scope. ACH transfers are typically used for domestic payments within the United States, while SWIFT transfers are designed for international money transfers between banks across the globe. ACH is known for being cost-effective and convenient for recurring payments, whereas SWIFT is preferred for secure and fast global transactions.

2. How does an ACH bank transfer work?

An ACH bank transfer works by electronically moving money between banks through the Automated Clearing House network. This process is commonly used for direct deposits, bill payments, and other domestic transfers within the United States. ACH transfers are typically processed in batches that take a few business days.

3. What is a SWIFT payment?

A SWIFT payment is a money transfer made through the network, which connects banks and financial institutions worldwide. It’s commonly used for international transfers, allowing individuals and businesses to send money across borders securely and efficiently.

4. When should I use ACH vs SWIFT for money transfers?

You should use ACH for domestic transfers within the United States, especially for recurring payments like payroll or bill payments. SWIFT is the better choice when sending money internationally, as it’s designed for cross-border transfers with robust security and global reach.

5. What is an ACH or SWIFT code?

An ACH code identifies the receiving bank for domestic transfers within the United States. On the other hand, a SWIFT code is an international bank code that helps identify a specific bank during global transactions, ensuring that the money reaches the correct destination.

6. How does a SWIFT payment system work?

The SWIFT payment system sends secure messages to authorize and complete international money transfers between banks. Each bank involved in the transaction, including intermediary banks, processes the payment until it reaches the final recipient.

7. Is an ACH transfer the same as a wire transfer?

While ACH transfers and wire transfers are both methods of moving money between banks, they differ. ACH transfers are typically used for domestic transactions and processed in batches, often taking a few days. Wire transfers, including those sent through SWIFT, are usually faster and used for domestic and international transfers, but they often come with higher fees.

8. What are the benefits of using an ACH payment vs SWIFT?

The benefits of using ACH payments include lower fees and the ability to set up automated recurring payments, making it ideal for domestic transactions. SWIFT payments, however, are beneficial for international transfers, offering secure and relatively fast transactions across borders, even though they might come with higher fees.

9. How do I find my bank's ACH or SWIFT code?

You can find your bank's ACH code on your checks or by contacting your bank directly. The SWIFT code can usually be found on your bank's website, your bank statement, or by asking your bank's customer service. These codes ensure that your money is transferred correctly to the intended recipient.

10. Can I use ACH or SWIFT for international transfers?

ACH is generally not used for international transfers as it’s limited to domestic transactions within the United States. The SWIFT network is the preferred method for international transfers, as it’s designed specifically for cross-border transactions between banks in different countries.