Receiving payments from clients when you're a freelancer is a crucial part of your business. Hence, understanding the different options available to ensure fast, secure, and economical payments is vital. Wire and ACH transfers are two of the most common payment systems.
There are many questions surrounding these methods, what is an ACH transfer? Is it better to use a Wire or ACH transfer? You'll discover all this and more below.
ACH stands for "Automated Clearing House." It's an electronic method that allows the movement of funds between U.S. bank accounts. It is one of the most used bank transfers nationally in the USA, as it facilitates recurring payments for debit or credit transactions.
How do they work?
Through the ACH network, which receives batches of transactions to then process by verifying and validating this information.
It then sends the details to the receiving bank, which will credit or debit the recipient's account and inform both parties when the process is completed.
How long does an ACH transfer take?
Although it can be processed the same day, it usually completes within 3 business days. This depends on when the transaction is initiated and the specific policies of the bank.
Also known as a Wire transfer, it is another system that allows the electronic sending of money from one bank account to another. In this case, it can be both nationally, through the Fedwire network, and internationally, through the SWIFT/BIC code.
How do they work?
A Wire transfer begins when the sender provides the recipient's account details, including the account number and the name of the bank.
The data is then sent through the SWIFT or Fedwire network, and the funds are transferred to the receiving bank. Finally, this bank processes the transaction and deposits the money into the recipient's account.
The process is completed within hours if they are local, and takes 3 to 5 business days if it is an international Wire transfer.
While both types of transfers facilitate the sending of funds between banking entities, they are not the same.
For a better understanding of ACH vs. Wire transfer, we show you a comparative table:
Characteristic | Wire Transfer | ACH Transfer |
Speed | -National: Within hours. -International: 3 to 5 business days. | Between a couple of hours and 3 business days. |
Cost | More expensive, with higher prices, especially for overseas. | Low fees or without any cost. |
Use | For both local and international transfers. Ideal for sending large sums of money. | For national transfers and frequent payments. |
System | SWIFT or Fedwire. | ACH network. |
Reversibility | Difficult to reverse once initiated. | Can be reversed in some cases within a timeframe. |
Initiation Process | Requires detailed information and bank validation. | Simpler. Generally, it can be done online without complex validations. |
Understanding these two methods will allow you to optimize your financial operations and also keep your cash flow in good condition. These are the main differences to consider when deciding whether to use Wire or ACH transfer.
However, choosing one or the other will depend on some factors, such as the urgency of the payment, the cost, and the geographical location of your clients.
The most important thing is that it can benefit both parties.
ACH transfers are designed for transactions within U.S. territory, and, therefore, cannot be initiated from Mexican banks. However, a similar option you can use is the "Electronic Funds Transfer" (TEF).
Wire transfers, on the other hand, can be performed from Mexico, only known as the "Interbank Electronic Payments System" (SPEI).
They are also a common method for international fund transfers using the SWIFT/BIC code. Therefore, they can be done from most Mexican banks, such as BBVA, Santander, Banorte, among others.
Need to receive money from the U.S. to Mexico?
Opt for DolarApp.
This application allows you to receive money from abroad directly to your bank account and securely. Just provide the sender with your account number or routing number so they can make the Wire or ACH transfer.
The option is convenient for receiving payments from your clients or remittances in MXN to your associated account. Anyway, if they send you dollars, you can convert them to Mexican pesos at the best exchange rate.
Additionally, its interface is quite intuitive, designed to simplify processes smoothly. With advanced technology that ensures the security of your data in all transactions you perform.
You will always get transparency in its fees and the exchange rate used. Therefore, you will know exactly how much you will receive and what the associated costs are.
Undoubtedly, one of the best alternatives to receive transfers from clients abroad.
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