EFT vs ACH Payments: Differences, Costs, and When You Should Use Each

EFT payment benefits

Over the past few decades, EFT payments have become increasingly popular and drastically reduced the usage of paper checks. Here are five benefits that make EFT an attractive payment for businesses:

• Cost efficient: With EFT payments, you can leave behind the expenses of processing paper checks, including postage, printing, and handling fees. This is especially important for businesses dealing with a large volume of transactions.
• Convenient: With checks or cash, getting the payment into your bank account depends on physically transporting the funds to deposit at the bank. EFT payments are processed faster, completely digitally, and with no need to leave the office.
• More secure: EFT payments are more secure than paper checks, reducing the risk of fraud, theft, and lost checks.
• More accurate: Digital EFT payments are handled automatically, reducing the likelihood of errors associated with manual processing, such as data entry mistakes or lost paperwork.
• Better for the environment: EFT payments are paperless, so they are a great option for companies that want to go green.

ACH payment benefits

ACH is increasingly becoming a top choice for electronic money transfers, especially in business transactions. In 2024, the value of ACH Network payments reached $86.2 trillion across 33.6 billion payments, up 7.6% from the year before.

To understand why this payment method is becoming so popular, let’s review some of the major advantages of using ACH for businesses.

4 benefits of ACH payments for B2B transactions

Fast

While check payments—still a common method among businesses—can take days or even weeks to process and clear, ACH transfers typically only take up to one or two business days to complete. Same day ACH transfers are processed even faster.

Cost-effective

ACH payments typically cost $0.20 to $1.50 per transaction, far cheaper than many other methods. A domestic wire transfer, by comparison, usually costs $25 to $30.

Some payment management tools, such as Melio, offer the ability to send and receive ACH payments. This can add up to quite a hefty saving.

Secure

ACH payments are designed to protect your business’s data and prevent fraud. Nacha enforces strict security measures and protocols on member institutions to ensure ACH transactions are safe and reliable. ACH payments are also encrypted to minimize the risk of your payment or data being forged, lost, or stolen.

Traceable

Like other forms of EFT, ACH payments leave a digital trail that lets you monitor and trace every payment, from the moment it’s sent until it is successfully delivered.

Processing times

Traditional paper checks must be physically deposited and only then can be processed and cleared. EFT payments on the whole have much faster processing times. Electronic checks are the slowest, taking three to five days to clear, while direct deposit takes one to three days. Credit card payment processing times depend on various factors, taking just a few minutes or up to a few days to be finalized in some cases.

ACH payments have a processing time of one to three days, but with same day ACH payments, businesses can benefit from fast payment processing and a secure cash flow.

Transaction limits

Transaction limits on EFT payments vary wildly, depending on the bank, institution, and payment type. For example, PayPal sets a limit of $60,000 per transaction. Credit card transaction limits are individualized and determined by your card issuer depending on a range of factors, such as credit rating and annual income.

ACH transaction limits also vary depending on the bank or institution, and standard daily limits often range from a few thousand to tens of thousands of dollars. For larger payments, the Same Day ACH per-payment limit is now $1 million, set to rise to $10 million in September 2027.

Use cases

Take a look at an example of a typical use case for EFT payments:

A mid-sized manufacturing company receives an invoice from its primary supplier for a shipment of raw materials. The accounts payable team logs into the company’s online banking portal and sets up an EFT payment to the supplier’s bank account, entering the invoice amount, supplier’s banking details, and payment date. The payment request goes through the company’s internal approval process. Once approved, the EFT payment is scheduled. On the scheduled payment date, the bank processes the EFT transaction, transferring funds from the manufacturer’s account to the supplier’s account. Both parties receive confirmation of the successful transaction, so the supplier is paid on time and safely, without the need for physical checks.

Now, let’s compare it to an ACH payment process using the Melio platform:

A food truck business orders a selection of soft drinks every two weeks from their favorite supplier. The business owner uses Melio to pay the vendor via ACH. After a fortnight, the vendor sends an electronic invoice, and the food trucker uploads it to their Melio account. With payment terms of seven days from the date of the invoice, the food trucker schedules an ACH payment for three days’ time. At the appointed date, the ACH payment is sent to the vendor automatically via the Melio platform. The ACH payment takes one day to process, at which time the vendor is notified that the funds arrived in their bank account. They send a digital receipt to the food truck business, and the process is repeated smoothly and seamlessly two weeks later.

As ACH is a type of EFT payment, it is not surprising that the processes and use cases are fairly similar. The big difference? By using Melio, ACH transactions can be scheduled and processed automatically and quickly, saving time and hassle for both parties.

Is Zelle an ACH or EFT payment?

Zelle is a type of EFT, but it is not an ACH payment. It moves money between banks through its own network rather than the ACH network.

Is EFT the same as direct deposit?

No. Direct deposit is one type of EFT, usually delivered through the ACH network. EFT is the broader term that also covers wires, cards, and e-checks.

Is a wire transfer an EFT or ACH payment?

A wire transfer is an EFT, but it is not an ACH payment. Wires move funds directly between banks, while ACH payments are batched through the ACH network.