Difference between bank wire and ACH ?

ACH is a proprietary, American system that compliments the account system structure of associated banks and identifies recepients based on thesorting code and account number. It uses a central database that sorts incoming and outgoing transactions based on the sorting code and forwards them to the main system of the bank in question, which in turn identifies the account number and enters a credit.

"Wires" are the remniscent of times of telegraphic transfers. Again,American banks had to go their own way and essense copied the SWIFTsystem, but used numbers rather than letters to uniquely identify banks.The SWIFT system however is superior in so far that each bank's SWIFT codeis interrelated in the main system with the SWIFT codes of allcorrespondence banks they have accounts with. Ideally, and what the systemhas been designed for, one bank can send money to another while hoppingthrough dozens of correspondence accounts in a matter of seconds.American "wires" can't do that.

On top of that, "wires" are more expensive because:

(1) royalty payments to the SWIFT system

(2) operation fee for use of the "wire"

(3) manual end sorting or confirmation required, depending on the bank'ssystem.

ACH, or the different national favours in other countries (notablyAustralia's BPay, Malaysia's bDagang and Germany's iTRANS) are fullyautomatic, much the same way the SWIFT system was originally, while theprehistoric "wire" is literally based on the telegraph and was laterupgraded to telex (but never to fax) and finally to the interbank network.

Anything that comes into the US from overseas is ALWAYS a SWIFT. It's inthe US in a matter of nanoseconds and comes to a grinding halt in thefirst correspondence account where it is converted into an "wire" and thensent on. Works the same way the other way around.

Now, if a foreign transfer arrived as an ACH, then one of thecorrespondence banks, tried to save a couple of Dollars and did a majorscrew up in the process, in so far that they factually stole the money fora few seconds. Rather than using a "wire" and correspondence accounts,they are likely to have simply made an ACH from their correspondeceaccount, which now had a new original sender. Also, the number ofcharacters in the MEMO line of both wires and ACH are very limited - oftennot enough to state all the jumps that funds had to do between banks andcorrespondence accounts on the way, hence the original sender can beobscured and funds become unsortable.

While America has one of the most cutting edge banking sectors, it'sdecades behind when one cent rolls across the border and they have tolabel it afterwards. Instead they rely completely on the receiving (orsending) bank to figure it all out.

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