Difference Between ACH and EFT
Difference Between ACH and EFT
ACH means Automatic Clearing House and EFT means Electronic Funds Transfer. Both the ACH and EFT refer to money transfer from one account to another or from one place to another. The Automatic Clearing House and the Electronic Funds Transfer have simplified the process of money transfer. Both the ATH and the EFT procedures are very quick and they have revolutionized the entire banking sector.
Though Automatic Clearing House and EFT and Electronic Funds Transfer are most of the times regarded as synonymous, they actually have some slight differences.
Electronic Funds Transfer mainly deals with transferring money from one account to another in an electronic way. One of the central functions of the banking system, the Automatic Clearing House helps in funds transfer between accounts and different banking institutions.
The different banks are connected through Automatic Clearing House. Electronic transfers, direct deposits, and debit card payments and electronic payments are normally processed through the Automatic Clearing House. The Automatic Clearing House is also used for certain local/state/federal tax transactions and business-to-business payments. It is the ACH that serves as a link between the point of origin of a transaction and the point of its termination.
It was in the 1970s that the Automatic Clearing House came into effect replacing the traditional ways of bank transactions.
Automatic Clearing House is used mainly when people get deposits directly into their account from their employer. No fee is taken for receiving the deposits. On the other hand, when funds are withdrawn or pulled from the account, this can be done through Electronic Funds Transfer. The Electronic Funds Transfer comes into effect when paying bills or buying goods with a credit or debit card,
Summary
1. ACH means Automatic Clearing House and EFT means Electronic Funds Transfer.
2. Electronic Funds Transfer mainly deals with transferring money from one account to another in an electronic way. The Automatic Clearing House helps in funds transfer between accounts and different banking institutions.
3. The different banks are connected through Automatic Clearing House. The ATH that serves as a link between the point of origin of a transaction and the point of its termination.
4. Electronic transfers, direct deposits, and debit card payments and electronic payments are normally processed through the Automatic Clearing House. The ATH is used mainly when people get deposits directly into their account from their employers.
5. When funds are withdrawn or pulled from the account, this can be done through Electronic Funds Transfer. The Electronic Funds Transfer comes into effect when paying bills or buying goods with a credit or debit card.
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I’m not sure that your answer clearly defines the difference between ACH and EFT.
EFT is a generic term that refers to the movement of funds electronically and covers not only direct deposit and direct payment, but debit card, stored value cards and ATM transactions.
The Automated Clearing House (ACH) is a nationwide payment system, governed by the ACH Operating Rules, which provide for the interbank clearing of electronic payments for participating depository financial institutions. Transactions received by the financial institution during the day are stored and processed later in a batch mode. Rather than sending each payment separately, ACH transactions are accumulated and sorted by destination for transmission during a predetermined period. This provides significant economies of scale. It also provides faster processing than paper checks, which must be physically handled. Instead of using paper to carry necessary transaction information, ACH transactions are transmitted electronically between financial institutions through data transmission.
ACH payments include:
* Direct Deposit of payroll, Social Security and other government benefits, and tax refunds
* Direct Payment of consumer bills like mortgages, utility bills, and insurance premiums
* Business-to-business payments
* e-Checks
* e-Commerce payments
* Federal, state, and local payments
For bookkeeping purposes, I write ACH if it’s something initiated by the payee, i.e. payroll, or automatic debit, i.e. recurring expenses. I write EFT if I go to the vendor’s website and pay it, or I pay it from our bank. I write “wire” if it’s a wire transfer. This is for my personal use so I know how bills are being paid.
I still don’t really get it. So ACH payments are a subcategory of EFT. I only know I don’t like being forced to select one or the other when attempting a transfer from one account to another and having to scramble to the Internet to try and decide which option should be selected. That is baloney and I resent it.
there no proven at all and I still don’t get it.
Your article confuses things by throwing in a third acronym: ATH…is this a typo for ACH?
When transfering from a source such as utilities to a bank to be paid, do you have to sign a form with each company involved? What charges are there and by who? I know direct deposit is free, but what about paying bills this way.
Great post – BTW , people want a FMCSA Medical Examiner\’s Certificate , I discovered a blank form here http://goo.gl/bqqdck
Would a payroll check have not for ACH/EFT use printed on it??