A banking business day includes all hours in which a member handles normal business functions. This may or may not correspond to the hours that a particular bank or its branch are open to the public. A legal holiday, such as Labor Day or Memorial Day, is not included in the schedule of business days, and a single business day ends when the bank no longer carries out its business functions.
The process of posting, reviewing, and processing payments is keyed to the calendar of banking business days. A transaction, such as a deposit or a withdrawal, or a debit or credit card processing, is posted on the banking business day when it takes place. This is true of both an individual and a merchant account. While the transaction undergoes review and approval, the transaction remains pending. This review process may take more than a single banking business day, which is the reason transaction dates may not correspond to posting dates.
The available funds and current balance figure associated with an account will reflect any posted transactions. This number updates constantly with each transaction, even outside of the banking business day. Processing of the transaction takes place at the end of the business day; for transactions taking place on weekends, the processing typically begins late Monday (assuming Monday is not a legal holiday).
Once the pending transaction–also known as a memo-post–is reviewed and approved, it is hard-posted to the account. This final step also takes place after the end of the business day, at a cut-off time which can vary from one financial institution to the next. A transaction such as a check deposit that takes place after the cut-off time will not hard-post or be credited to available funds until the next business banking day; for that reason a late or weekend deposit meant to cover a check written previously in the day, or the day prior, may not achieve that goal.
For merchant accounts, credit card processing works the same way. The transaction posts to the account and changes the customer’s current and available balance immediately. The hard post occurs at the end of the merchant’s business day, which may not correspond with that of the bank. It’s wise when opening a new bank account, or receiving a new credit card, to be aware of the time set by the bank for cut-off and the close of business.