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Where I live (Central Europe) it doesn't seem to be possible to make a transaction between two bank accounts of two different banks that is outside their office hours. This also applies to online banking apps.

If I place a transaction request (to pay a bill for example, a SEPA "order", to be precise) after 15:30 or before 08:00 (both 24h format), the transaction is realized at some time during the bank's official open hours (next work day after 08:00). This also automatically excludes weekends and public holidays (can issue payments but they are realized the next work day). You can however do this between two accounts of the same bank (an internal transaction).

It seems a bit unusual considering (from an end user perspective) that I can pay with a service such as Paypal at any time I please, yet my own bank is not capable of such a thing, unless the recipient is a client of the same bank.

Why is this the case? Is this the usual practice in the rest of Europe? What about the rest of the world? I know that local banks are part of a larger system. Is this a limitation of an underlying system such as TARGET2?

  • Here in México the same thing applies. You can put the transaction at anytime in the day, but it will be applied in office hours. So, I can open my account at midnight and start sending money to all my friends, but they won't get it until 8:30am – fernando.reyes Dec 21 '16 at 16:09
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    With banks not working in those hours, they might be nervous about large frauds going on, and nobody realizing it before they lost millions. During office hours, someone is probably monitoring indicators that would raise such tries. – Aganju Dec 21 '16 at 16:46
  • I am in the US. My bank and broker let me enter transactions any time, but they don't execute until the next business day, if it's already after hours. – JoeTaxpayer Dec 21 '16 at 18:30
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    In regards to your PayPal comment, just because you've made a transaction it does not mean that the seller has access to those funds. PayPal puts transactions in a 30-day holding period (last I knew) just in case there is an issue with the payment or if there is a return, etc... I believe that if you do enough business through PayPal then they will remove the holding period but they have a very tight grip on the money if you are a seller. Having your funds frozen during an investigation or dispute is somewhat common. – MonkeyZeus Dec 21 '16 at 19:12
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    Your question title is somewhat misleading. It seems that what you're saying is that the online service (i.e., the ability to log in and make the transfer) is available at all times, but the action you initiate is not actually carried out until later, during normal business hours. This is not unusual for many online services (e.g., you can place all sorts of online orders but they may not be processed until the next business day). The "service" they're providing is just the ability to make the request for an action, not to immediately carry it out. – BrenBarn Dec 22 '16 at 2:13
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Banks do their processing in batches at a given time during the day. The time depends on bank policies, which may be affected by banking regulations. In the US, many (all?) banks do processing during OFF hours. So you can enter a transaction at any time, and the transaction will be registered after the next processing period. And different banks handle online transactions differently. My bank treats internal transactions as instantaneous. If I pay a credit card bill with "available" funds from my checking account, the balance will be available instantly. Other banks only post transactions while the doors are open. It varies.

But if I transfer funds to an outside account, my primary bank shows the funds as being withdrawn, but the transaction is pending, since the transfer is external. The outside account in this example typically takes 2-3 days to process transfers. In this case, it's sort of like a check, because the balance still technically contains that money, and I could spend it, and likely cause an overdraft.

Paypal is an odd bird. You can place a balance there, you can open a line of credit there, if you set up your account correctly, any balance you carry might be earning interest. But they're not really a bank. However, they're also not always as responsive as you seem to think. If you pay someone, they do not get the money until your funding source pays PayPal. That's why there used to be a preference for credit card sourced PayPal accounts when shopping on ebay etc. I've bought game currency for online games and had the product not be available until all the transactions cleared. Frustrating to make a impulse buy that takes 3 days to deliver.

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it doesn't seem to be possible to make a transaction between two bank accounts of two different banks that is outside their office hours.

This is because any transfer between 2 banks needs a clearing network [run by central banks or agencies]. In past most of these network are batch based and align to bank working hours and holidays.

Quite a few countries are now moving towards a new clearing networks. FasterPay in UK for example is 24x7 and you can move funds within seconds between banks. Similarly India has IMPS, etc.

  • So this does appear to be a limitation of the underlying system. FasterPay refers to Faster Payments, I presume? Their info is indeed impressive: Virtually all internet and telephone banking payments in the UK are now processed via Faster Payments. I've read here that UK central bank is not part of TARGET2. Perhaps this gives them the flexibility they need for a near real-time payment system or something that resembles it. – predi Dec 22 '16 at 8:29
  • @predi Yes that is right about Faster Payments. It is a realtime settlement system for low value payments. UK also has CHAPS that is RTGS [Real time gross settlement] for high value payments. TARGET2 is pan European RTGS for high value payments in EUR. As UK still has GBP, the Bank of England does not participate in TARGET2, however all/most Banks in UK do participate in TARGET2. – Dheer Dec 22 '16 at 8:44

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