EFT vs. ACH: What is the difference?


If you get paid by direct deposit or your gym membership is automatically deducted from your bank account, you’ve experienced an EFT or ACH transaction.

EFT stands for Electronic Fund Transfer and is the backbone of the Canadian payment industry. ACH stands for Automatic Clearing House and holds the weight of the American payment industry. Both do very similar things with slight differences.

What is EFT?

For Canadians, we use EFT in our everyday life. When we pay with debit, the fund transfers happen through EFT. EFT removes funds from one account and sends the immediate payment to someone else.

EFT verifies that the funds are in the account before withdrawing them, which means if you have insufficient funds, EFT won’t work.

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What is ACH?

In the United States ACH is used primarily for business to business transactions and payroll. Each year it moves more than $40 trillion USD or more than $109,589,041,096 a day!

ACH connects banks together, not specific accounts like EFT. With EFT money is sent from one account to another. ACH connects the banks and creates a daily debit and credit tally.

With so much money going back and forth in-between the banks each day, ACH acts as an intermediary.

If Bambora holds a Wells Fargo bank account and wants to submit payroll, Wells Fargo would send the money with the routing banks information to ACH. During the same day Bank of America, Citigroup, TD, and all the other American banks would be sending ACH all of their transfers.

ACH tallies and holds all of this information until the end of the day. At that point, it sees how much money to send to each bank, and how much money to credit each bank. This is why there is a few days delay when dealing with ACH since it is not immediate like with EFT.

ACH transfers are also authorized through signatures, similar to cheques. The funds are not verified before the transfer which means if there isn’t enough money in the account, the party with insufficient funds has to pay a fee.

EFT and ACH are both used during Batch Processing. Bambora can fully support EFT transfers for its Canadian merchants and conduct payroll using ACH for its American merchants.

Curious? Find out more by contacting our sales team.

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