Eli5: why does it still take 2 business days for a check to clear when other transactions are instant?

Question

Eli5: why does it still take 2 business days for a check to clear when other transactions are instant?

In: 146

Answer 1

Checks are paper drafts, meaning they are regulated differently than Automated Clearing House (ACH) transactions.

When a check is deposited, it has to travel through banking channels from the depositing bank to the paying bank. Sometimes those banks have direct relationships and the funds move quicker. Other times they don’t and the checks have to be routed from one bank to another based on the relationships between them. Checks can go through up to like 20 banks (that’s the most I’ve seen) when traveling from depositing bank to paying bank.