US Banking Terms Glossary: ​​What is ACH, ABA, EFT, Wire and more (2023)

Opening a bank account and learning about different types of money transactions can be a lot without all the acronyms involved.

In this guide, you'll find all the definitions you're looking for and a complete breakdown of the most important payment and routing number types you need to know.

We'll also cover Wise as an alternative option for sending money internationally and apply all the knowledge you've gained in this article.

So let's start.

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All of these acronyms can be a bit tricky, so let's break them down a bit:

ABAAmerican Banking Association
CCAAutomated Clearing House
Electronic Funds TransferElectronic Funds Transfer

What types of routing and payment numbers are available in the United States?

There are many different banks in the US, but they are all connected through a system of numbers called "routing numbers."

route numbersthey're a bit like postal codes, but for banks. With these numbers, there are several different ways to make payments between banks.

Here are some terms related to transferring money; you will find them all discussed below.

  • Electronic Funds Transfer
  • electronic checks
  • paper checks
  • CCA
  • Cable
  • Direct / bank debits

Different types of payments may require different banksroute numbers, and just like if you enter the wrong zip code in a letter, your transfer could even fail if you use the wrong code.

However, remember that the numbers discussed in this article refer to your bank, not to you personally. Like 5-digit ZIP codes, these 9-digit routing numbers are not unique to you.

(Video) What Is ACH Payment Processing?

In order to receive a payment, you will need to provide more information, such as a routing number that can identify you as an individual.

What is an EFT payment?

stands for EFTElectronic Funds Transfer, and refers to any payment from one bank account to another that is made electronically.

EFTs cover:
  • Credit and debit card payments
  • direct deposit payments
  • Many payments through online banking
  • Most bank transfers
  • other methods

EFT is too broad a term; the conclusion is simply that notes and coins are not exchanged. In the US, these transfers are sometimes called electronic checks or electronic checks; is the same.

The benefits of EFT payments are like the benefits of technology in general: paying electronically simplifies the process for you and reduces administrative costs.

How do EFT payments work?

There are many different types of EFT payments, so you'll find them in many different contexts, from grocery shopping to cashing your paycheck. What they all have in common is that they start with the payer requesting and authorizing the payment.

Once the bank details are submitted, the payer has the money withdrawn from their account. This money is credited to the receiving bank, which pays the beneficiary. So bank balances change, but they are communicated electronically and there is no physical movement of money.

Read our full guide onWhat is the EFT payment?

Send money to or from the US with Wise

If all you want is a fast, secure, and low-cost international money transfer,IntelligentI can help.

Sending money through your bank, or through a regular money transfer service, means you could be forced to pay more due to low exchange rates, not to mention expensive flat fees.

Some US banks do not offer online transfers, which means you have to make a special trip to your local branch to figure this out. If you are abroad, this can be prohibitive.

Wise does everything online and usesthe mid-market exchange rate- just like what you'll find on Google - and only charges a low, transparent fee.

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What is an ACH payment?

ACH transfers are a type of electronic transfer (EFT) that includes direct debits and direct deposits:

(Video) Understanding the ACH Network

  • With ACH direct debit, authorize another person or organization to withdraw money from your bank account on a regular basis.

  • With an ACH direct deposit, someone else can pay you.

Unlike wire transfers, which we'll get to later, banks process ACH payments in bulk. This can make them relatively slow, but also quite cheap. So if you're not in a rush, an ACH payment might be a good option.

Can I send an ACH internationally?

To transfer money internationally with a bank, you will generally need to make an electronic transfer, as banks predominantly offer ACH for payments within the US only.

However, yarn can sometimes be difficult to make and can be quite expensive. There is more information on bank transfers below, and also on non-bank alternatives like Wise.

Intelligentuses a different approach to international payments compared to banks, which may be cheaper for you.

Its technology connects local bank accounts around the world for customers in the United States to send money to Wise's US bank account, and Wise then pays from its networked account in the destination country in the required currency.

This reduces expensive international transfer fees and makes payments faster. It also allows them to accept ACH payments for their international transfers.

Read our full guide onwhat is ACH

What is ABA?

Another acronym you may have come across is ABA, which stands forAmerican Bankers Association. It is the trade body that represents banks and all types of financial service providers, such as trusts and community savings associations.

The ABA is involved in many things related to the banking industry, including creating best practices, lobbying, and most of all, managing ABA routing numbers.

What are ABA routing numbers?

ABA numbersare codes assigned to banks by the American Bankers Association. Each bank in the US has its own ABA number, which is why they are sometimes simply called bank routing numbers.

Large banks may use multiple ABA routing numbers; what you need will depend on exactly where you are.

🔢 All the different digits represent something in particular:
  • The first 4 already indicated the location of the bank, although this is no longer a reliable guide
  • The next 4 refer to which Federal Reserve bank you use to process your transfers
  • The ninth digit is a 'checksum' that validates the first eight digits

ABA numbers may change if your bank is acquired by another bank. If that happens, you'll need to make sure that everyone you pay regularly, and everyone who pays you, has the new number. You will also need a new checkbook.

(Video) ACH Transfer vs Wire Transfer: Banking 101: Easy Peasy Finance for Kids and Beginners

What is the difference between an ACH and ABA routing number?

Don't fall for the common trap: banks sometimes require you to use different routing numbers for different types of transfers. It varies from bank to bank, but they may have different numbers for paper transfers, wire transfers, and wire transfers.

All routing numbers are ABA numbers, but you can also have what is commonly called an ACH number.It is actually an ABA number that is used for ACH transfers only.

    Your bank's ABA routing number will have 9 digits. If you need it for an electronic check or ACH, use the ABA number in the lower left corner of your checkbook.
    If you don't have a checkbook, check with your bank directly: look online or call them. The ABA number usually starts with 2 digits between 00 and 12.
    An ACH routing number is also 9 digits long; this is normally only for ACH payments. Most likely, it is the same 9-digit number you find in your checkbook.
    However, it may be different. You must check your bank online or with your bank to confirm.
    If your bank has a special ACH number, it can start with digits between 61 and 72.

Check with your bank if you can use the same number for all types of transfers or if you need different ones. You can easily find out by asking at a branch, using your bank's online FAQ, or by going to your online bank and starting a customer service chat.

Learn more with our comprehensive guide towhat is the ABA number

What is a paycheck?

A check is a written instruction directing the transfer of a certain amount of money from one bank account to another.

Checks used to be very common, but today they are less popular due to the rise of electronic payment methods.

If you receive a check, take it to your bank and you can pay it into your account (sometimes called "cashing a check") with the help of a bank teller.

There's a chance you can withdraw at an ATM, but that's a bit trickier.

If it is your first time, it is best to go to your bank in person, or through the drive-thru if they offer it, to deposit the money from the check in your bank account.

Pay by check? read ourcomplete guide on how to write a check

What are routing numbers used for on checks?

The 9-digit routing number on your checks is an ABA routing number.

You can usually use this for paper transfers, electronic checks, or deductions, and possibly, not necessarily, other types of transfers.

If you need a routing number for an ACH transfer, or especially a wire transfer, check with your bank first.

What is a bank transfer?

Wire transfers, these days, are electronic funds transfers. However, they got their name when they first appeared, and the instructions were literally transmitted over a wire, through the telegraph system.

(Video) ACH 101 - Information about the ACH Payment System presented by ASC X9

Wire transfers are generally faster compared to the ACH payments we looked at earlier. These are processed one by one rather than in batches, though you'll need to check your bank's cutoff times as missing them could set your money back.

Wire transfers are generally more expensive than ACH, so they are most commonly used when sending a large amount of money, sending an international payment, or sending money in a hurry.

How does a national bank transfer work?

Domestic wire transfers are a traditional way to transfer your money from one bank to another, but banks often charge a hefty amount for the service.

And sometimes they can be inconvenient, as some US banks don't yet offer online wire transfers.

After you request a wire transfer, your bank will connect with the destination bank and transfer the funds, generally much faster than an ACH transfer, as long as you meet your bank's cut-off times.

How does an international bank transfer work?

The principle ofinternational bank transfersit is exactly the same as for domestic ones, but the process is much more complicated and often involves intermediary banks connecting the sender with the recipient.

The basic process is that your money travels from your bank to the recipient's bank, through 1 to 3 intermediary banks, through theRed SWIFT.

This is reliable, but it can be slow, and theintermediary banksYou can also deduct a fee as you process payments, meaning the recipient ultimately gets less than expected.

If you are receiving an international bank transfer, you may need to provide a SWIFT code instead of a routing number. Check with your bank about what they use, or you canbuy online.

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Is there a wiring route number?

If you are receiving a domestic wire transfer within the US, you may need to provide the payer with a different routing number than the one on your checkbook.

The cable routing number, technically still an ABA routing number, is a 9-digit code like the ones already discussed.

You will need to check directly with your bank which number to provide; It may be the same as the ACH number and/or routing number on your checkbook, but it may not be.

If you receive a wire transfer from another country, you may not need a routing number. Instead, you may need to give them the address of your bank.Swift Code, which you can find out through them orbuy online.

(Video) How to Upload a File in ACH Payment Services | Chase for Business®

Have you ever wondered what a bank transfer is? Find everything you need to know atthis practical guide

Regardless of how you choose to send your money, good luck navigating the complex world of ETFs and routing numbers, and don't let banks get in the way of your transfer.

This publication is provided for general information purposes only and is not intended to cover all aspects of the subject matter. It is not intended to constitute advice on which you should rely. You should obtain professional or specialist advice before taking or refraining from taking any action based on the content of this publication. The information in this publication does not constitute legal, tax or professional advice from TransferWise Limited or its affiliates. Previous results do not guarantee a similar result. We make no representations or warranties, express or implied, that the content of the publication is accurate, complete, or up-to-date.


What is the difference between ACH ABA and wire ABA? ›

ABA routing numbers are used for paper or check transfers. ACH routing numbers are used for electronic transfers. Transactions using ACH routing numbers “clear” faster (same or next day) than funds transferred on paper checks using ABA numbers.

What is the difference between ACH and EFT and wire? ›

EFT is a broad term that describes a variety of electronic payment methods. Two of those methods are ACH transfers and wire transfers. While ACH transfers are usually free but take a couple of days to process, wire transfers are generally quick but may cost a high fee.

What is the difference between a wire and an ACH? ›

Both ACH and wire transfers work in a similar way, but with different timelines and rules. Wire transfers are direct, generally immediate transfers between two financial institutions. ACH transfers, meanwhile, pass through the Automated Clearing House, and can take up to a few business days.

What is the difference between ACH routing and wire routing? ›

What Is the Difference Between ACH and Wire Transfers? An ACH transfer is completed through a clearing house and can be used to process direct payments or direct deposits. Wire transfers allow for the movement of money from one bank account to another, typically for a fee.

Which routing number do I use electronic or wire? ›

Technically speaking, ABA routing numbers apply to paper checks while ACH routing numbers apply to electronic transfers and withdrawals.

Which routing number do I use paper and electronic or wires? ›

Use the paper routing number that would be printed on your checks.

What are the four types of EFT? ›

Types of EFT payments
  • Credit and debit cards. Every time you use a credit or debit card, you're making an EFT payment. ...
  • ATMs. Using an ATM is a form of electronic funds transfer, even though you receive cash in your hand. ...
  • Wire transfers. ...
  • Direct deposit/bank transfer. ...
  • Online payment systems.
Sep 7, 2021

Is EFT a wire transfer or direct deposit? ›

Electronic Fund Transfer (EFT) is the broad term used for the digital movement of money from one bank account to another. It encompasses all kinds of digital payment methods including credit card processing, wire transfers, and ACH. Electronic fund transfers do not require the direct involvement of bank employees.

Should I bank wire or EFT? ›

One of the most important is the speed of transaction. As mentioned above, wire transfers can be processed instantly, while other forms of EFT may take longer to process payments. This makes wire transfers a great choice for time-sensitive payments, such as important business deals.

What happens if you use wire routing number instead of ACH? ›

know that banks have two separate routing numbers. One for wire transfers and one for ACH transfers. If you used your banks wire transfer number it will still go to your bank but the banks computer systems will not know where to put the money and there is a good chance they will reject it.

Is routing number the same as ABA? ›

A routing number is a nine-digit code used by financial institutions to identify other financial institutions. It's also known as an RTN (routing transit number) and an ABA (American Bankers Association) routing number. Combined with your account number, it allows institutions to locate your individual account.

What is the best way to transfer money between banks? ›

An Automated Clearing House, or ACH, transfer is a way to electronically transfer money between banks through the Automated Clearing House network. Also known as Direct Deposit, direct pay, or electronic check, ACH transfers are one of the most commonly-used methods to transfer money from one bank account to another.

Is ACH the same as direct deposit? ›

A “direct deposit” is a type of payment made via the ACH network. It's an informal name for common ACH deposits where individuals receive payments directly into their bank accounts. The ACH-based payouts popularly referred to as direct deposits include: Salary and wages.

Is Zelle ACH or wire? ›

Zelle uses the Automated Clearing House (ACH) payments system to speed payments between U.S. bank accounts. While you could initiate an ACH payment to a friend from your bank account, that transfer could take three days to process. With Zelle, your money arrives in minutes.

Which routing number do I use to transfer money? ›

The routing number is the nine-digit, left-most number along the bottom. Your account number is the center number along the bottom of your check. You should also be able to find these numbers through your online banking account. You should also know the name and address of your bank and the bank you're sending it to.

What does ABA stand for in banking? ›

The ABA routing number was developed by the American Bankers Association in 1910. It identifies the specific financial institution responsible for the payment of a negotiable instrument.

Why do I have 2 routing numbers? ›

A bank or credit union may have more than one routing number. This is often the case with big banks like Bank of America and Chase Bank, which have two routing numbers in some states.

Do you use a different routing number for wire transfers? ›

You will need both routing numbers and bank account numbers for domestic wire transfers within the United States. The ABA routing transit number (ABA RTN) is a nine-digit code printed on the bottom of checks which identifies the financial institution from which the funds are sent.

What are the two types of routing numbers? ›

ABA routing numbers are used for paper or check transfers; whereas ACH routing numbers are used for electronic transfers. 2.

What is the difference between wire transfer and bank transfer? ›

In short, yes: in a wire transfer, the sender's bank acts as an intermediary, sending information about the transfer to the receiver's bank before the money is moved, whereas a bank transfer simply involves sending money directly from one bank account to another.

Which routing number do I use for ACH? ›

ACH stands for Automated Clearing House. To find your ACH routing number, first check your checkbook. It may be the nine-digit number to the left of your account number. ACH is an electronic money transfer system that lets individuals receive or send payments via the Federal ACH network of banks in the United States.

What are the different types of wire transfers? ›

There are two types of wire transfers: domestic and international. International transfers are also called remittance transfers, international wires or international money transfers, and must be for more than $15 when sent from the United States to another country.

What is an example of an EFT? ›

EFT payments are a speedier alternative to physical payment methods like cash and checks. Direct deposit, credit card transactions, ATM transactions, electronic checks and phone payments are all types of EFT payments.

Which is better ACH or EFT? ›

For ACH payments, the payments are transferred between two banks; however, the money makes a pit stop in the Automated Clearing House Network first, where it is further processed. On the other hand, EFT payments are typically faster than ACH transactions, in some cases occurring instantaneously in real-time.

Is an EFT a debit or credit? ›

As discussed in Electronic Fund Transfers Coverage: Transactions Question 1, Regulation E applies to an EFT that authorizes a financial institution to debit or credit a consumer's account. 12 CFR 1005.3(a). The term EFT includes debit card transactions. 12 CFR 1005.3(b)(1)(v).

What happens if you wire transfer more than 10000? ›

If transactions involve more than $10,000, you are responsible for reporting the transfers to the Internal Revenue Service (IRS). Failing to do so could lead to fines and other legal repercussions.

What is the best wire transfer? ›

Wise: Best for easy sign-up.
  • Google Pay: Fastest (tie with Zelle)
  • PayPal: Most popular online.
  • Walmart2Walmart: Best for nonbank transfers.
  • Best ways to make international money transfers.
  • MoneyGram: Cheapest for bank-to-bank transfers.
  • Xoom: Fastest.
  • Western Union: Best transfer options.
  • Wise: Best for easy sign-up.
Oct 3, 2022

What is the best way to wire money? ›

You can usually initiate a bank-to-bank wire transfer in person at your bank or financial instruction's local branch or through your online bank account. You'll usually need to provide the recipient's full name, contact information, and bank account details such as routing and transfer numbers.

How much does it cost to do an EFT? ›

Now how much does eft therapy costs, in numbers? Fees each session will often range from $60 to $185 USD, with the average rate falling between between $80 and $125.

Can you use the same routing number for an ACH and wire? ›

Not necessarily. Both transactions require a 9-digit number, but you will have to verify with the financial institution where you are sending the funds, if the ABA number for ACH or wires are the same, or which routing number should be used for a wire transfer and for the ACH.

Should I give someone my ACH account number? ›

Be stingy with your banking information to avoid bank scams. Know that less is best when it comes to sharing info: Avoid giving your account and routing numbers to people you don't know. Another tip to prevent fraud: Go for multi-factor authentication when banking online.

What info is needed for ACH wire transfer? ›

All banks in the United States can use ACH, as all that's needed to receive an ACH transfer is a valid bank account and routing number. Additionally, payment processors like Square, PayPal, and Stripe also use ACH.

Is ABA same as wire transfer? ›

An ABA number is used for wires and electronic automatic clearing house (ACH) transactions such as electronic funds transfer, direct deposit, direct payment of consumer bills, e-checks, and tax payments, among others.

Why does Bank of America have 2 routing numbers? ›

Your ABA routing number (for domestic money transfers) is the one which is labeled “paper and electronic transfers.” The other routing number is for wire transfers.

What is an EFT number? ›

ACH as Electronic Funds Transfer (EFT)

A United States-based ACH transaction uses bank account information, including the bank routing number (ABA number) and bank account number for the payer and payee and their originating bank and receiving bank.


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6. Automated Clearing House (ACH) | Learn With Finance Strategists
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