ACH, Wire, RTP® and FedNow®: A guide to today’s payment transfer types

Businesses are most interested in increasing the speed of their digital transactions, according to a research survey1 of small business banking decision makers commissioned by Alkami in 2023. Among the top features small businesses want from their financial institution, speed ranked very high. But, their satisfaction for the current speed of their banking options is low. It’s crystal clear: Businesses want more speed in their payments. But what type of speedy transactions do they need? Quick funds transfers aren’t all created equal.

Currently, wire transfers, Automated Clearing House transfers (ACH) and instant transfers are dominating the payments market. What’s the difference among those options?

Below we will highlight the three types of electronic funds transfers, breaking down their fees, limits, speed, and typical use cases.

Wire transfers

Wire transfers are payment sent by a business to credit a receiving party. Domestic wire transfers, those that are settled to US-based financial institutions sent in United States dollars (USD), are processed via the Federal Reserve Bank (FRB). International wire transfers, sent in both USD and/or foreign currencies are processed through a few international networks with the most prominent being the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. Both types of wire transfers facilitate the fast and secure transfer of funds from one financial institution to another. Wire transfers are a preferred method for large dollar value transactions because of their traceability (financial institutions can track wire transfers efficiently), security, credibility, and finality of settlement as wire transfers are non-reversible once they are sent. A business account must have the available funds to initiate a wire, which assures the credibility of the payment.


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