Night cycle is a scheduled period for making electronic funds transfers (EFTs) that falls during the evening hours. It was established in 1979 to address the need for a second shift of electronic payments, which would provide more complete coverage for financial institutions. When a payment is made during the night cycle, if the payment goes through by midnight, same day funds availability is possible. This allows banks and other institutions to move money to locations where it is needed in time for transactions to clear.
Also known as the nighttime window, the night cycle falls between 10 p.m. and 1:30 a.m. Its counterpart, the day cycle or daytime window, lies between 8 a.m. and 1 p.m. Banks can make electronic funds transfers using the automated clearing house (ACH) system in batches during one of these periods. Fees for transferring funds are applied to cover the expenses associated with processing funds transfers and maintaining the ACH system.
The ACH provides a system for smoothly and easily moving funds electronically across the United States by relying on a standardized system. Breaking it up into two shifts allows for the movement of funds during key periods of time in an orderly fashion. The night cycle or second shift can be used for transactions that were not processed in time for the day cycle and for time sensitive transactions that cannot wait for the following day.
It is important for individual consumers expecting debits or credits via ACH to check to confirm that these transactions have actually taken place. Sometimes it can take up to 72 hours for a payment to move through the system, because processing is involved. Banks are more likely to use the night cycle for their own transfers, moving funds into a concentration account, a kind of aggregate account, during the night cycle so that they will be available where they are needed the next day.
Transferring funds electronically allows for the rapid movement of money between locations. This can be critical for some types of transactions that might otherwise be held up with waiting for other types of transfers. ACH processing is used in a wide variety of financial transactions from inter-regional movements of funds between branches of the same institution to handling mortgage payments in a timely fashion. Consumers may interact with ACH directly in situations like making electronic payments online for utilities and other bills.