Difference between Wire Transfer (SWIFT) and ACH (Automated Clearing House) Money transfer

Even though both Wire transfer and ACH are ways to send a large amount of money from one place to another, there are some significant differences in the way they operate. A wire transfer, also commonly referred to as SWIFT transfer is an electronic transfer of money from one financial institution to another across the financial network. The word "wire" is chosen to signal the electronic transfer of money. It is fast and secure and can be used to transfer funds from one bank or credit union account to another.

The wire transfer is mostly used for international money transfers like sending money from the USA to India, particularly for a large amount of money due to its safety, security, and speed advantages because no actual cash is moved in wire transfer transactions.

On the other hand, ACH stands for Automated Clearing House (ACH) is an electronic network between banks and other financial institutions run by the National Automated clearing house Association. ACH process all kind of money transfer or payments like credit and debit transaction between banks and accounts. 

It also processes direct deposits of payments and monthly debits for recurring payments e.g. investment in the stock market via Systematic Investment Plan (SIP) or EMI payments towards a home loan or personal loan.

Remittance Providers like CurrencyFair, Money2India, TransferWise, Xoom, and Banks use the customer's account number and routing number to withdraw money via ACH online rather than transacting via credit or debit cards.

How does Wire transfer work?

The wire transfer is one of the easiest ways to send money from one place to another. If you are an NRI (Non-resident Indian), you can send a large amount of money to India from the USA or Canada to India. In wire transfer, The sender who wants to send money goes to local banks like Bank Of America, Citibank, or WellsFargo in the USA or DBS, OCBC, UOB in Singapore and submit the wire transfer slip or form to initiate a transaction.

You can initiate a wire transfer request from your local bank through an online or offline channel. This wire transfer form contains details of correspondent bank and account number of the foreign bank along with customers details e.g. sender's account number, name, address, and purpose of remittance and Swift or BIC Code for the remittance provider e.g. if you are sending money to any ICICI bank account in India then you need to provide swift code of ICICI Bank for retail remittances is which is "ICICINBBNRI".


The local bank now transfers the amount to the correspondent or intermediary bank mentioning the SWIFT code, which is used to identify the account held by the remittance provider in the correspondent bank. That's why this code is different for different currency even if you are sending money to the same receiver. Once the remittance provider sees the money in his account held at the correspondent bank, he transfers the money to the receiver, and the wire transfer completes.

Wire transfer usually takes 1 or 2 days depending upon which bank you are choosing. For example, if you want to transfer funds to India from overseas using ICICI bank, you would have access to fewer correspondent banks than the State bank of India, which has more than one correspondent bank in many countries.

For example, in the USA then have 12 correspondent bank accounts like with Bank of America, New York-Merchant A/c, Citibank N.A., New York, Deutsche Bank Trust Co. Americas (BTC) N.Y, HSBC Bank USA, JP Morgan Chase National Association, N Y, Wells Fargo Bank N.A, Standard Chartered Bank, New York, etc.

They all accept USD fund transfers and have different SWIFT codes, you can check the full list here for other countries like Singapore, Australia, England, the UK, and UAE.


The wire transfer can be used to send money within a country e.g. USA to different states or can be used to send money from one country to another e.g. from the USA to India or Singapore, or from Australia to Singapore, etc.

Most of the banks take service charges for wire transfer e.g. State bank of Chicago charges $30 for write transfers with USA and $45 to $50 dollar for a wire transfer in USD Dollar to India for less than $10,000 and above. If you are asking for issuing the draft then charges go down to $20 for less than 10,000 USD and $40 for more than that. You can see the schedule of charges here.

Here is a nice diagram that explains how does the wire transfer or SWIFT work:

How does ACH (Automated Clearing house) work?

The ACH is also an electronic way to send money from one place to another and can be used for international money transfers. In ACH, Sender registers with a routing number and account number with a remittance service provider which sends registration information to the Correspondent bank.

The correspondent bank then creates a request with details and transfers to ACH or Automated Clearing house which then directs the Overseas bank to send money to the receiver.

You can use the ACH services of your bank for both domestic and international transfers e.g. you can use ACH service to make your utility bill payments e.g. utility and telco/internet bills, credit card payments, loan payments e.g. EMI. Most of the banks provide ACH services free of charge e.g. State bank of Chicago.

Here is a nice diagram that explains how ACH works:

That's all about the difference between Wire transfer and ACH (automated clearing house). Even though both allow the transfer of funds both domestic and international electronically, there is quite a lot of differences between them e.g. wire transfer is mostly used for a large amount of money and it's expensive as compared to ACH, which is offered free of charge by many.

The role of the correspondent bank is critical in both cases and you should choose the bank with a good network of the correspondent bank across the world to move your money from one place to another e.g. State Bank of India for Indians remitting money across the world.

P. S. - If you are looking to send money abroad consider TransferWise. It’s a great tool for sending and receiving money internationally with low fees — much cheaper than using your local bank. You can also get your own local bank account details in Europe, the UK, the US, Australia, and New Zealand with the TransferWise Borderless account

P. P. S - And, If you are looking for alternatives, you can also check out CurrencyFair, which also have a promotion for all new customers that can be used that has 3 free transfer.