Eli5: why does it still take 2 business days for a check to clear when other transactions are instant?
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I think the technical has been covered, so I’ll address the non-technical. In the U.S., this is mostly a matter of bank policy. Federal regulation requires that financial institutions make deposits available no later than certain time frames. Cash and electronic transfers must be made available by the next day, but many banks (particularly smaller “local” banks) make them available immediately. There are different categories of checks, so depending on what type of check it is depends on how soon the bank must give you access to the funds. There are also exceptions for various reasons that allow banks to hold the check funds for longer periods of time, such as up to 7 days. But the bank is not required to hold the funds at all, and they can give you the funds instantly.
The reason they often don’t is that it represents an unknown risk to the bank. Most of the time the bank won’t know for 1-2 days whether the check you presented to them is valid or not, and even then they still might not know. The world of check payments is fairly complex, being governed by federal regulation, state law, and Federal Reserve procedures, so the sooner the bank makes funds from a check available to a depositor, the riskier it is. Perhaps the risk is lower if the check is drawn on the U.S. Treasury or some large corporation, but even those kind of checks end up being counterfeited, so the bank always has some amount of risk when taking a check for deposit.
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