All cheques must be processed – or cleared and settled – through the payments system. Here’s how that works. When you deposit a cheque into your account, your bank will send the cheque to the bank of the person who wrote the cheque. That bank makes sure that the cheque is legitimate and there are enough funds in the cheque-writer’s account to cover the cheque, and then sends the funds to your bank.
This process can take a few days but, for most cheques, the bank makes the funds available to the customer right away. However, it isn’t until your bank gets confirmation from the cheque-writer’s bank that it knows for sure that the funds are available. What most people don’t realize is that, until it receives that confirmation, the bank is really advancing you the money.