Wire Transfer vs. Direct Deposit: Exploring the Better Option a

Wire Transfer vs. Direct Deposit: Which is Better?

8 August, 2022
4 min read
Rachelle Fisher, AVP, Digital Transformation
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What you'll learn

  • Difference between wire transfer and direct deposit
  • Should you choose wire transfer or direct deposit for your business?
What is wire transfer?
What is direct deposit?
Wire transfer vs direct deposit- what is the difference?
Which is better: wire transfer or direct deposit?
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Sending money directly to a bank account is one of the most convenient ways to make a transaction. However, with evolving technologies, there are many ways to transfer money. And often it is confusing for users to choose between the payment methods available. In this article, we explain the difference between wire transfers and direct deposits and help you choose the right one for your business.

What is wire transfer?

Market size of wire transfer network in 2021

A wire transfer is an electronic method of transferring money from one bank account to another. It is mostly used for cross-border transactions. For example, if you are working abroad and want to send money directly to your family in your home country, you can use a wire transfer. 

How does a wire transfer work?

Previously, banks used to transfer money via telegraphic wires, but now the entire process has changed. At present, wire transfers take place through SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, which is a messaging protocol used by over 11,000 banks worldwide. The network consists of all the instructions and information that is required to complete the wire transfer.

What is direct deposit?

As the name suggests, direct deposit is a method of transferring money electronically from one bank account to another using the ACH network.  You can complete this transfer electronically without the use of traditional paper checks. Businesses mostly use direct deposits when they have to make payments to their employees periodically or as reimbursements. Another use of direct deposit is for getting tax refunds. Once the transaction is initiated, the payee’s account will be automatically credited with the associated sum of money. 

How does a direct deposit work?

To understand the working of direct deposit, let us take an example of a company that has to make payments to their employees on the 30th of every month. To make the process hassle-free, the company needs to collect the banking information of all its employees.  On the 29th of the month, the company sends the payroll instructions to the associated bank. The bank then transfers the information to the Automated Clearing House (ACH). After approximately one business day, the ACH network will initiate the payment process, after verifying the details from the bank. Once the details are verified, the ACH network initiates the transactions to complete the process. It typically takes around one to five business days to reflect the amount in the employee’s bank account. 

Wire transfer vs direct deposit- what is the difference?

Wire Transfer Direct Deposit
There is no geographical limitation to a wire transfer. It can be initiated domestically and internationally. Direct deposit can be initiated in the same country.
Wire transfers are moderated by the SWIFT and Fedwire protocols. Direct deposit is supervised by the NACHA
The money transfer fee varies from $10 to $30 for transactions inside the same country. For international transfers, the fee will be higher. The money transfer fee ranges from $3 to $10 of the transferred amount, depending on the type of business organization.
It can take up to 24 banking hours to complete one transaction. For international payments, it may take up to 2 business days. It can take 1-2 business days to complete a transaction.
It is mostly used for international transactions and for transferring higher amounts of money. Businesses that make recurring payments in batches (example- salaries, tax refunds, social security payments, expense reimbursements, etc.) use it.

Which is better: wire transfer or direct deposit?

Both these modes of payment have their own advantages. It all depends on what terms you’re looking for while transferring the money.

If you’re an employer who is looking for a convenient way to send money to your employees at the end of the month, then direct deposit will be the easiest and most straightforward way of completing this process.

However, if you are looking to send money to your business partner or supplier  in another country, then a wire transfer will be the best option.


Both wire transfer and direct deposit serve their own purposes. With each having its pros and cons, you need to choose the right and the most suitable payment option, depending on your business needs. 

Other resources that can help you:


Question: Is wire transfer faster than direct deposit?

Answer: Yes, wire transfers are faster but costlier than direct deposits. A wire transfer can be completed within a day, whereas a direct deposit can take up to 2 business days to reflect the amount in your bank account.

Question: What are the risks of receiving a wire transfer?

Answer: Wire transfer includes several risks including fraud, malware, teller mistakes, and many more. Also, if you send money via wire transfer, it cannot be reverted since it’s a one-way transaction. Therefore, you have to be extra cautious while sending money via wire transfer.

Question: What are the different types of B2B payment methods?

Answer: The different types of B2B payment methods are—cash, checks, wire transfers, credit cards, and e-payments.

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