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What’s the difference between EFT and ACH payments?

Owning a business means being your own boss, enjoying the fruits of your labor, and gaining the respect of customers and colleagues alike. However, it also means managing your business finances which can be a lot less fun and a lot more confusing. With all the jargon, acronyms, and buzzwords you hear flying around, it may feel like you have to carry a dictionary just to keep up. Luckily, we’re not just here to help process your payments, we can also help you better understand the various financial tools at your disposal. In this article, we’ll cover the differences and similarities between two of the most confusing yet common financial terms out there: EFT and ACH payments.

One reason EFTs and ACH payments are so puzzling is that they’re not completely different things. ACH payments are to EFTs what carrots are to vegetables, or, in other words, ACH payments are just one form of EFT.

Still confused? That’s okay. Let’s dive into the definition of each term before we go into why they’re such good news for your business.

What is EFT? 

EFT simply stands for electronic funds transfer. It’s an umbrella term that covers every way of electronically moving money between bank accounts. Among the common forms of EFTs are wire transfers, direct deposits, electronic checks, card transactions, and, of course, ACH payments.

This means that if you’re aiming for a paperless business or just looking to improve efficiency by using a digital bill payment solution, you’ll definitely find yourself using some form of EFT.

So, what are ACH payments?

As we’ve already established, ACH is one form of EFT, but not all EFTs are ACH payments.

ACH stands for Automated Clearing House, and ACH payments are made via a network of financial institutions (a.k.a, clearing houses) used to transfer money electronically between bank accounts across the U.S. The network is governed and regulated by non-profit organization NACHA, which ensures the process is safe and reliable.

ACH payments are good for business

ACH is increasingly becoming a top choice for electronic money transfers, especially in business transactions, where traditional payment methods are still quite common.

According to Nacha, over the past decade, business-to-business (B2B) ACH transactions nearly doubled in volume from $22.4 trillion in 2011 to $41.7 trillion in 2020.

Faced with pandemic-related restrictions and challenges, businesses increased their use of ACH even further, showing a 17.5% increase in volume year-over-year to $1.2 billion in the first quarter of 2021.

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


While waiting around for a check—which is still among the most common payment methods among businesses—can take days or even weeks, ACH transfers only take up to one or two business days to complete.


Some payment management tools, such as Melio, offer the ability to send and receive ACH payments at no additional cost.

This can add up to quite a hefty saving. A single wire transfer generally costs $25-$30 and check payments are also far from free. Just consider the cost of the paper check, the envelope, the stamp, and the staff hours spent on cutting and sending it, which can amount to $4-$20 per check, according to Bank of America.


Nacha enforces strict security measures and protocols on member institutions to ensure ACH transactions are safe and reliable.

ACH payments are designed to protect your business’s data and prevent fraud. They are also encrypted to minimize the risk of your payment or data being forged, lost, or stolen.


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

What are you waiting for?

Now that we’ve established what EFT and ACH payments mean and outlined why a growing number of businesses choose to implement them, it may be time to re-examine your own business practices. Our suggestion? Drop your checkbook, go paperless, and start paying all your bills online with ACH through Melio.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.