It is usual practice for the most relevant part of online banking services (making payments) to only be available during working hours of a bank?

Question

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?

Answer 1

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But if I transfer funds to an outside account, my primary bank shows the funds as being withdrawn, but the transaction is pending, since the transfer is external.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.

Answer 2

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.