also called domestic rail · local transfer
A country's own fast, cheap system for moving money between local accounts, such as ACH in the US, Faster Payments in the UK or SEPA in the euro area, as opposed to the slower international SWIFT route.
A local payment rail is a country's own fast, cheap system for moving money between accounts inside that country, like ACH in the US or SEPA in the euro area. Sending the same money across borders through the international SWIFT route is slower and gets picked at by fees along the way. This is the trick behind services that feel instant: they hold money in each country and pay you out on the local rail rather than actually wiring it over the border.
You send money to yourself abroad and expect the delay and fees of an international wire. Instead it lands almost at once, because the service paid you from a pool it already held in that country over the local rail, and your money never really crossed a border at all.
A transfer that uses the local rail arrives quickly and cheaply, while the same money sent internationally crawls through correspondent banks with fees. Services like Wise feel instant because they hold money in each country and pay you on the local rail instead of wiring across borders.
The difference is the whole point, so here is each one in a line.
These are the networks a payment can travel on, which differ in speed and cost.
SWIFT is the international messaging system behind cross-border wires, a wire transfer is a direct bank-to-bank payment that moves individually, and SEPA is the cheap euro-area system.
ACH is the US batch system for everyday transfers, a local payment rail is any country's own fast domestic system such as ACH, Faster Payments or SEPA, and an intermediary bank is a middle bank that relays an international transfer when the two banks have no direct link.
ACH · SEPA transfer · SWIFT · Wire transfer
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