ACH vs. Check: What Is Better?

Written by Banks Editorial Team
6 min. read
Written by Banks Editorial Team
6 min. read

Sponsored By

People have traded with each other for thousands of years. Modern technology and fiat currencies have given us more choices, enhanced security, and greater safety. You can exchange cash for goods and services, but some transactions are too expensive to send cash back and forth. It’s also difficult to track cash expenses for tax purposes. So if you want to get tax deductions, it’s better to avoid using cash. 

Even if a transaction won’t help with taxes, it’s better to use a safe and trackable payment method for larger purchases. ACH and check deposits solved this problem years ago, providing payers with an easier way to send funds to recipients. Unfortunately, you can only choose one of these methods for each payment. Understanding the differences between check and ACH deposits will help you make better decisions for your finances.

MoneyLion Financial App
Change the way you Bank, Save, Invest, & Grow. Access Cash Advances, Early Paychecks, Credit Builder Loans, Online Banking, Automated Investing & More. Effortlessly Manage Your Finances - All In One Place.

What is an Automated Clearing House (ACH) Payment?

An ACH payment is an electronic payment that quickly sends funds from one bank account to another. ACH payments function like checks, but the electronic component saves time and transfers funds sooner. You can do an ACH transfer from any device, eliminating the need to visit a bank to make a deposit.

The Automated Clearing House has a relatively short history compared to checks and financial institutions that enable ACH transfers. The Automated Clearing House was officially established in the mid-1970s after some use in the late 1960s. Many businesses use Automated Clearing Houses to quickly and automatically distribute payrolls. In some cases, an escrow holds onto the payment and distributes the proceeds for your company. You can have this happen automatically, and it saves time instead of having to write checks or wait for digitally produced checks to get printed. 

What is a Check?

A check is a physical piece of paper that contains the payer’s details. The recipient must write their name, account number, and purpose of the check (i.e., “for deposit only”) on the back before cashing it at the bank. Some employers provide checks on payday, but if you work remotely, it can take a few days for the check to arrive via mail. This delay can prolong your access to funds, and while it’s unlikely to get lost or stolen, this scenario is possible for a physical check.

A major disadvantage of checks was that you had to visit the bank to deposit your check. However, mobile banking apps have modernized and allow you to deposit a check by taking pictures of the front and back. 

Checks have been around much longer than the Automated Clearing House. Europeans used checks centuries ago, as early as 1400. This staple payment method remains popular even as technology disrupts it and offers new solutions for business owners and consumers to explore.

ACH vs. Check: Comparisons

ACH and checks serve the same purpose. These payment methods make it easy to transfer funds between bank accounts in a trackable way. Cash is not trackable, which makes it a less favorable way for businesses to send payments to employees. Here are some of the ways ACH and checks compare with each other.

Costs and Fees

Costs and fees will add up for every transaction. These expenses are small for some transactions, but if you are involved with hundreds of ACH and check deposits, those fees can add up. 

ACH transactions have minimal costs, with most of these transfers not exceeding $0.40 in fees. Paper checks are more expensive because of purchasing the checks and shipping them out. Opting for ACH transfers can help you save a few cents on each transaction. However, you could save with checks if you don’t have to mail them out. Shipping and obtaining checks is the expensive part. Checks usually have no processing fees, but the differences are minimal. 

Convenience

Consumers want a convenient path to receiving payments. Any hiccups along the way will frustrate both parties, and it’s important to choose the right payment method for both groups.

ACH transfers are far more convenient than paper checks. You can have recurring ACH transfers arrive in your employees’ bank accounts or send the paychecks manually with a few clicks. Paper checks require more work. You have to sign off on each check and make sure it goes to the right person. 

ACH transfers are also more convenient for workers. Direct deposits automatically go into their bank accounts, but they have to wait for the check to arrive and then endorse it. You can save time by taking screenshots of your check with your mobile banking app. Most financial institutions have this option, but it’s still an extra step to access your funds.

Checks may be more convenient for business owners and individuals who do not want to navigate ACH technology. Consumers who prefer to avoid learning new software may benefit from sending checks. If the recipient does not have a bank account, you will have to send a check since the recipient must have a bank account to enable an ACH transfer.

MoneyLion Financial App
Change the way you Bank, Save, Invest, & Grow. Access Cash Advances, Early Paychecks, Credit Builder Loans, Online Banking, Automated Investing & More. Effortlessly Manage Your Finances - All In One Place.

Delivery

Both transfers have similar wait times before the proceeds get cleared. ACH transfers arrive in your bank account within 1-3 business days. Checks usually clear within two business days. However, a check can end up taking longer since you may not receive the check right away. You also have to account for the amount of time it takes to receive a check in the mail.

Clearing

Checks and ACH transfers have similar wait times for clearing. It will take more days for an ACH transfer or check to clear if you cash in on a larger sum. The first $200 of any check will clear instantly, so a check can be a better option if your business owner distributes them quickly. Some banks provide early paydays to compensate for the wait times. These banks typically provide a small amount of cash two days in advance at 0% APR. These services are optional, and the payday you receive would pay off the loan. It’s a good option to keep in mind if you have an emergency expense.

Speed

Consumers want to receive their funds as quickly as possible. Any delays can force them to take desperate measures if they do not have enough proceeds to cover an emergency expense. Employers who quickly pay their workers can increase morale. On the other hand, a complicated process and hurdles that prolong the payment process can result in losing talented employees. 

Most checks and ACH transfers get cleared within 1-2 business days. But some ACH transfers take up to three days to clear. Checks are better when it comes to speed, but that is only true if you obtain your check on payday. It can take several days for a check to arrive by mail. 

Reliability

ACH deposits are more reliable than checks since they happen electronically. Human error can complicate check deposits. An employer may put in the wrong number or give a check to the wrong person. If you do not include the recipient’s name on the check, it’s essentially a blank check that anyone can cash in at the bank. 

It’s also possible for a check to bounce because an employer forgets about it. A check is good for up to six months. Some employees may deposit their check 1-2 months later, leaving the business owner unprepared for the additional costs. Business owners can protect themselves from this scenario by storing extra funds and keeping track of each check deposit, but it’s hard to keep track of every deposit.

Security

You work hard to make your money. You want to make sure the money you send goes to the right person and that you receive the money from your paycheck. A secure payment solution is critical to feeling confident about receiving your paycheck and having greater peace of mind.

ACH transfers are more secure since they take place electronically. Data encryption and automated clearing house technology provide extra protection and are easy to track. However, checks can get stolen, and the bank account details on the check make a business owner more susceptible to fraud. For example, some scammers create checks with a company’s bank account and routing number. You can find these numbers on any check. That’s why some businesses opt for money orders instead, which remove those sensitive details. However, an ACH transfer is the best approach from a security standpoint.

When Should You Use ACH?

ACH makes sense for the majority of money transfers. This payment method is more secure, has a similar waiting time as checks, and is very convenient. While fees for ACH transfers and checks are both small, you save some money with the ACH route. If you have to mail checks to employees, it adds an extra layer of risk and complexity. Some employees may decide to work with a business with a more reliable payment method than checks. Nevertheless, ACH transfers are a great solution in most cases.

ACH transfers also minimize the risk of bounced checks. Employees may cash in on their checks months in the future, leaving a business owner unprepared for the sudden withdrawal. The bounced check is a bad experience for both parties, resulting in additional fees. A bounced check can also reduce an employee’s trust in your company. You don’t want to lose great talent because of an avoidable check bounce. ACH transfers eliminate this scenario with direct deposits that take place right away instead of when an employee visits the bank to deposit the check. 

When Should You Use a Check?

Even though ACH transfers present numerous benefits, some businesses prefer to make and receive payments with checks. Unlike traveler’s checks which have fallen far from their peak, business checks are alive and well. Giving a check to a client can also make your brand look more professional. A check can include your company’s logo and help you stand out from ACH transfers. 

Some recipients are still excited to receive checks, while ACH transfers are seamless and may not have the same excitement. An ACH transfer is more practical than a check for most money transfers, but not everyone will care about that detail. Not all clients will want to endure learning a new piece of technology to make ACH transfers work for them. 

Emotions and personal taste aren’t the only reasons to consider using checks. Some recipients do not have bank accounts. You must have a bank account for an ACH transfer, but you can cash out a check through a check cashing service. Recipients do not need a bank account to realize the check’s value.

MoneyLion Financial App
Change the way you Bank, Save, Invest, & Grow. Access Cash Advances, Early Paychecks, Credit Builder Loans, Online Banking, Automated Investing & More. Effortlessly Manage Your Finances - All In One Place.

You may also like

Rebuilding your credit can take a few months or almost two years. Discover how to build your credit faster.
Read more

Advertisement Disclosure

Product name, logo, brands, and other trademarks featured or referred to within Banks.com are the property of their respective trademark holders. This site may be compensated through third party advertisers. The offers that may appear on Banks.com’s website are from companies from which Banks.com may receive compensation. This compensation may influence the selection, appearance, and order of appearance of the offers listed on the website. However, this compensation also facilitates the provision by Banks.com of certain services to you at no charge. The website does not include all financial services companies or all of their available product and service offerings.