The modern banking industry is largely a system of debits and credits rather a system of exchanging tangible currency. The shift from reliance on currency to intangible assets has allowed the banking industry to streamline payment methods between parties using a variety of electronic means for payments to exchange hands without the need for checks or currency being drawn from an account.
ACH transfers—an acronym that can mean Automatic Clearinghouse or Automatic Check Handling for the same system—are a system of electronic checks used to trade small amounts of money between parties. The Worldwide Automatic Transaction Clearing House clears and manages ACH transfers, as the agency tracks debits and credits between banks. ACH transfers usually take three or four days to clear.
Bank Wire Transfers
Although we typically use the term “wire transfer” when talking about transferring money from one bank to another, bank wire transfers are typically only used to transfer large sums of money between banks. The Federal Reserve Wire Network brokers the transactions instead of WATCH, and transfers are processed in the same day in most cases.
International Wire Transfer
Transferring money across international lines takes a different set of protocols for domestic wire transfers. SWIFT wire transfers are available to trade money across borders, and are used to transfer quickly funds without check fees between banks in larger nations. BIC and IBAN provides a similar service, and covers an overlapping, but not identical, set of countries as SWIFT.
Commercial Money Transfer Service
Commercial money transfer services operate largely outside the banking systems. Using stores of their own assets to back transfers between points, they reimburse agents and transfer locations using funds managed completely within their own systems.
- ACH Network: Introduction to ACH
- Bank of America: Wire Transfer Frequently Asked Questions
- Consumer Financial Protection Bureau. "Your Mortgage Closing Checklist," Page 2. Accessed May 18, 2020.
- Wells Fargo. "The Ins and Outs of Wire Transfers." Accessed May 18, 2020.
- U.S. Department of the Treasury Financial Crimes Enforcement Network. "Appendix D - Fundamentals of the Funds Transfer Process," Pages 58–63. Accessed May 18, 2020.
- Consumer Financial Protection Bureau. "What Is a Wire Transfer?" Accessed May 18, 2020.
- Consumer Financial Protection Bureau. "What Is a Remittance Transfer?" Accessed May 18, 2020.
- Capital One. "Checking That Goes Wherever Your Business Takes You." Accessed May 18, 2020.
- Fidelity. "Transfer Money/Shares - Frequently Asked Questions." Accessed May 18, 2020.
- Chase Bank. "Wire Transfers From Chase." Accessed May 18, 2020.
- Teacher's Credit Union. "Wire Transfers." Accessed May 18, 2020.
- Headway Capital. "ACH vs. Credit vs. EFT vs. Wire Transfer: Which Should You Use?" Accessed May 18, 2020.
- Federal Deposit Insurance Corporation. "Rules for Banks." Accessed May 18, 2020.
- Consumer Financial Protection Bureau. "Can I Cancel a Money Transfer?" Accessed May 18, 2020.
- Western Union. "When Will My Receiver Get the Money?" Accessed May 18, 2020.
- Nacha. "Same Day ACH: Moving Payments Faster (Phase 1)." Accessed May 18, 2020.
- Wells Fargo. "Six Things You May Not Know About the ACH Network." Accessed May 18, 2020.
- Popmoney. "Fees and Limits." Accessed May 18, 2020.
Wilhelm Schnotz has worked as a freelance writer since 1998, covering arts and entertainment, culture and financial stories for a variety of consumer publications. His work has appeared in dozens of print titles, including "TV Guide" and "The Dallas Observer." Schnotz holds a Bachelor of Arts in journalism from Colorado State University.