ACH vs. EFT: The Complete Guide for Canadian Businesses

EFT (Electronic Funds Transfer) and ACH (Automated Clearing House) are both batch-processing networks for moving money, but they operate in different countries. EFT is the primary system used in Canada for domestic bank-to-bank transfers, overseen by Payments Canada. ACH is the U.S. equivalent used for domestic transfers within the United States, governed by Nacha. While standard Canadian bank accounts cannot process U.S. ACH payments natively, modern cross-border platforms allow Canadian businesses to access both networks seamlessly to avoid expensive international wire fees.

Key Takeaways

• Geography is Everything: EFTs move Canadian Dollars (CAD) domestically within Canada; ACH moves US Dollars (USD) domestically within the United States.
• The Cost Factor: To pay a U.S. vendor, traditional Canadian banks typically force you to use SWIFT wire transfers, which can cost anywhere from $15 to $50+ CAD per transaction. In contrast, ACH payments cost pennies or are entirely free.
• The Modern Solution: You don't need a U.S. LLC or SSN to use ACH. Cross-border fintechs like Bank on Loop provide Canadian businesses with true U.S.-domiciled accounts, giving you native access to the ACH network.

Table of Contents

1. ACH vs. EFT: The Direct Comparison
2. What is an EFT (Electronic Funds Transfer)?
3. What is an ACH (Automated Clearing House)?
4. The Cross-Border Trap: Why Traditional Banks Force You to Wire
5. Deep Dive: How Bank on Loop Unlocks ACH for Canadian Businesses
6. Frequently Asked Questions (FAQ)
7. Conclusion

1. ACH vs. EFT: The Direct Comparison

When scaling a business across North America, understanding payment rails isn't just an accounting issue—it's a margin issue. Here is exactly how the two networks stack up:

2. What is an EFT (Electronic Funds Transfer)?

In Canada, EFT is the backbone of the domestic payments industry. Whether you are setting up direct deposit for your Toronto-based employees or pulling a monthly software subscription from a client via a Pre-Authorized Debit (PAD), you are using the EFT network.

Unlike an Interac e-Transfer (which is meant for real-time, lower-limit, single transactions), EFTs process in "batches." Banks collect all the EFT requests throughout the day and process them together. This batch system makes EFTs incredibly cheap, highly reliable, and capable of handling massive volume.

3. What is an ACH (Automated Clearing House)?

ACH is the American equivalent of the EFT network. It is massive, moving almost the entire U.S. economy's B2B and B2C non-cash transactions. To put it into perspective, in 2025 alone, the ACH Network processed 35.2 billion payments valued at $93 trillion.

For a Canadian business, accessing the ACH network is the Holy Grail of cross-border commerce. If you sell on Amazon U.S., use Stripe, or pay U.S. contractors through Deel, those platforms expect to interact with an ACH-compatible account.

4. The Cross-Border Trap: Why Traditional Banks Force You to Wire

Here is the exact trap most Canadian founders fall into:

You go to a traditional "Big 5" Canadian bank and ask for a U.S. Dollar account. They give you one. But when you try to link it to your U.S. Shopify store or pay a vendor in Texas, the form asks for a 9-digit U.S. Routing Number.

You look at your Canadian bank details, and you only have a Transit and Institution number.

Why? Because your USD account is domiciled in Canada. It is a Canadian account that merely holds USD. Because it isn't domiciled in the U.S., it cannot touch the ACH network.

As a result, your Canadian bank forces you to send an International SWIFT Wire Transfer. Suddenly, you are paying $35 in wire fees, plus a hidden 2.5% to 3.5% foreign exchange (FX) markup, just to pay a $500 U.S. invoice. This crushes your margins.

5. Deep Dive: How Bank on Loop Unlocks ACH for Canadian Businesses

This is exactly where Bank on Loop steps in to fix the cross-border banking infrastructure.

Loop operates as a financial platform designed specifically for Canadian businesses that need to operate globally. Instead of forcing you to fly to Delaware to open an LLC just to get a bank account, Loop provides true, U.S.-domiciled accounts to Canadian entities in minutes.

Here is how Loop mathematically changes your cross-border operations:

• Native ACH Access: Loop gives you a legitimate 9-digit U.S. Routing Number and Account Number. You can receive payouts from U.S. platforms (like Stripe or Amazon) for free, and pay U.S. vendors via ACH for free. No more $35 wire fees.
• Zero-FX Multi-Currency Cards: Loop offers corporate cards that let you spend in CAD, USD, EUR, and GBP. If you have USD in your Loop account and spend USD on the card, there is a 0% FX fee.
• Fortune-500 FX Rates: If you do need to convert your Canadian dollars to USD to fund that ACH transfer, Loop doesn't charge the 3% bank spread. Depending on your pricing tier, Loop charges a transparent markup of just 0.10% to 0.50%:
  • Loop Basic ($0/month): 0.50% FX fee.
  • Loop Plus ($79/month): 0.25% FX fee.
  • Loop Power ($299/month): 0.10% FX fee (Market-leading).
• Fully Insured: Your USD operating accounts via Loop are provided by FDIC-insured institutions, giving you coverage up to $250,000 USD per depositor. (And CAD balances are CDIC-protected up to $100,000).

By treating CAD and USD as equal, native citizens within your dashboard, Loop effectively eliminates the "border" from your banking.

6. Frequently Asked Questions (FAQ)

Can a Canadian business get a U.S. routing number without an SSN?

Yes. Using platforms like Bank on Loop, Canadian incorporated businesses can open U.S.-domiciled accounts using their Canadian business registration documents and owner ID. No U.S. Social Security Number (SSN) or Employer Identification Number (EIN) is required.

Is ACH faster than a Wire Transfer?

No, but it is much cheaper. Wire transfers process in real-time (often within hours), whereas ACH payments take 1-3 business days. However, wire transfers cost up to $50, while ACH is typically free. For routine payments like payroll and vendor invoices, ACH is the superior choice.

Do Canadian banks support ACH?

Traditional Canadian bank accounts do not natively support U.S. ACH. They operate on the Canadian EFT network. To send an ACH, you must have an account explicitly domiciled in the United States.

7. Conclusion

Stop letting traditional banking infrastructure dictate your profit margins. If you are doing business across the border, relying on Canadian EFTs to mimic global payments—or worse, relying on expensive SWIFT wires—is a fast track to bleeding capital.

By understanding the distinct roles of EFTs for your Canadian operations and ACH for your U.S. scaling, you can build a treasury system that works for you, not against you.