Cash Settlement Cut-Off Times: EUR/USD

Thanks to modern technology, even the smallest ecommerce business can have all sorts of international ties. As a merchant, you might have suppliers in China and customers in the UK, while your actual business is based in the US.

While these overseas business links can help to expand your business, they also create the challenge of having to deal with multiple currencies. If you’re hoping to transfer money to your overseas business partners (or receive payment from overseas customers), and you want to make sure they receive the right currency, then you’ll need to know about cash settlement cut-off times.

In this article, we’ll specifically focus on one of the most common currency exchanges: EUR/USD. We’ll provide definitions for cash settlements and cut-off times, as well as discuss the cut-off times for EUR/USD cash settlements. Additionally, we’ll look at how Zyla can help US ecommerce sellers transfer and convert currency.

How does currency settlement work?

Currency or cash settlement transactions are also often referred to as ‘FX’ (foreign exchange) transactions. You should also be aware of the term ‘cross-currency settlement’, which refers to a transaction that does not use the US dollar.

But what is a currency settlement? In short, currency settlement is a type of transaction where a bank, (on behalf of a corporate client) will arrange for one currency to be sold in exchange for another. It’s a huge part of international enterprise, as businesses (such as ecommerce sellers) will often need to exchange their local currency for those of their suppliers and partners.

What is a currency cut-off time?

While currency settlement is a very common process, it’s not instantaneous, and the transaction cannot occur whenever a business wants. It works similarly to a stock market, where trading always ends at a certain time of day. In fact, the global marketplace through which currencies are exchanged (called Forex) can be thought of as a sort of international stock exchange, only with currencies instead of business stocks.

These set time frames — beyond which currency settlement cannot take place — are called cut-off times. Currency conversions must be initiated before these cut-off times, in order for them to be completed on the same day they are created. So, while the transaction will still take place, it will thus be delayed until the next business day.

For some businesses, these overnight delays may not seem like a huge challenge. For others, they could be a disaster. For example, if you have a deadline to repay a supplier or cover a particular bill, failing to initiate an FX transaction before the cut-off time could mean failing to pay that bill and incurring late fees, or harming your relationship with the supplier.

It’s therefore particularly important to be aware of the cut-off times before weekends and national holidays, as there may be multiple days before the next working day.

What is the cut-off time for EUR/USD cash settlement?

Unfortunately, there is no universal cut-off time for EUR/USD that you can set a consistent alarm for. The cut-off time for EUR/USD will vary depending on the banks involved, and the time zones within which the transaction is taking place.

Most commercial banks will list the currencies they can perform exchanges for alongside the relevant cut-off times. Contact the bank you use for currency settlement to check what their cut-off times are, and make sure you get the time appropriate for your location. Time zones are especially relevant if you use a large international bank like HSBC for FX transactions.

Additionally, there are different cut-off times for each currency — the cut-off time for EUR/USD will differ from the GBP/USD cut-off time, for instance. This is because each individual currency will have a different cut-off time. If one of the currencies has an earlier time listed, then the transaction must be initiated before that earlier time (you would simply ignore the later time).

What is the best time of day to exchange currency?

Although cut-off times differ based on multiple variables, there are three points to keep in mind if you want to ensure successful cash settlement transactions:

• Most currency cut-offs fall between 2pm and 11pm (based on the local time of the relevant bank).
  • As such, most cash settlement transactions should be completed at this time. But it’s best to check with your bank first, as some cut-off times still do fall outside this range.
• Additionally, avoid completing transactions on a Friday, as any delays that cause you to miss the cut-off time could mean your transaction isn’t completed until after the weekend.
• Finally, avoid currency holidays. No settlements will occur on these dates for the relevant currency.

Enjoy high-speed FX transactions with Zyla

At Zyla, we’re experts in international exchange and overseas currency transfers. We offer competitive exchange rates, as well as providing fast and secure transfers to help ensure you don’t miss cash settlement cut-off times.

If you often handle multiple currencies, Zyla multi-currency accounts help you save time and money by allowing you to hold multiple currencies until the exchange rate is in your favor. What’s more, we don’t require any up-front payments or subscription fees for you to open an account with us.

Interested? Sign up for your free Zyla account today and start enjoying the benefits of our easy-to-use international money transfer platform.

If you have any questions, don’t hesitate to get in touch with our team.