Is There A Difference Between ACH and Direct Deposit?


There are many different ways to send and receive money electronically. It can be confusing to wrap your head around all the payment transfer methods. If you don’t know which method is best – don’t worry. We’ll go over all the details and compare ACH vs. direct deposits, so you’ll which is ideal for each scenario. 

We’ll also touch upon some low-cost alternatives and ways to enhance your standard ACH transfers and direct deposits. Take a look to get started! 

What is ACH? 

ACH transfers are a popular kind of electronic transfer that is processed by the Automated Clearing House (ACH) Network. They are a safe, reliable way to move money between different bank accounts and financial institutions. ACH transfers take about 2 to 5 business days to deposit but are almost always free of charge. 

ACH transfers work best with small, frequent deposits. You may be receiving or sending money via ACH transfers and not even know it. Some common types of ACH transfers include paying bills online, automatic contributions to a savings account, IRS deposits, and government benefits.

What is Direct Deposit?

Direct deposits are an electronic payment method that uses the ACH network to move money between banks. In other words, direct deposits are one type of ACH transfer. Direct deposits are commonly used to replace traditional cash and checks – as they are safer and more convenient.

For example, the Social Security Administration often uses direct deposits to deposit government benefits instead of mailing out checks. Many employers will also use direct deposits instead of paying their employees in cash or with checks. 

If your employer pays you through direct deposits, have you considered ways to access your paycheck earlier? With a RoarMoney online checking account from MoneyLion, you can get paid up to 2 days earlier just by linking up your direct deposits. 

Similarities Between ACH and Direct Deposit

ACH transfers and direct deposits both use the ACH network to facilitate transactions. In fact, direct deposits are one of the many different forms of ACH transfers. Both direct deposits and ACH transfers are typically secure ways of transferring money. Especially in comparison to checks or cash that can be easily lost, stolen, or forged. 

Another thing ACH transfers have in common with direct deposits is that both are almost always free. Although you may be charged a small fee in rare cases – you’ll never be charged the kinds of fees wire transfers impose or even the ones some peer-to-peer payment platforms charge. 

Both direct deposits and ACH transfers tend to take several business days to complete. This could potentially pose an issue if you need money quickly. 

Difference Between ACH and Direct Deposit

Even though direct deposits are one form of ACH transfers – ACH transfers cover a wider range of transactions that direct deposits do not. For example, many banks offer mobile apps with the technology to photograph a physical check and deposit it into a bank account and even though this is a check deposit, this transaction is an ACH transfer – not a direct deposit. 

Direct deposits only allow a bank or a financial institution to deposit money into an account. While in some cases your employer can reverse a direct deposit before it is complete, it’s not possible to withdraw money from a bank account via direct deposit. 

How to Get the Cash You Need Quickly

The downfall to both ACH transfers and direct deposits is that is can take several days before you are actually able to access the money. Fortunately, MoneyLion offers some solutions that allow you to get the cash you need quickly. 

As we’ve touched upon, opening a RoarMoney checking account and setting up direct deposits lets you receive your paycheck up to 2 days earlier. That means money is in your pocket to pay off bills or go out for a fun night sooner. 

All you need to do is download the MoneyLion app, sign up with your email address, open a RoarMoney account and connect your direct deposits. 

You can also connect your existing bank account and get funds today by using Instacash. Instacash is an instant, 0% APR cash advance from MoneyLion. You can get up to $250 deposited into your bank account and you only need to pay the money back when you get your next paycheck. 

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