What happens if I transfer money to the wrong bank account?

Gone are the days when you had to pull out your wallet or write a cheque to pay back a friend or settle a bill. With internet banking and online accounts, sending money to friends, family, or businesses is a breeze.

But here’s the catch: you might accidentally send cash to the wrong account. So what do you do if that happens? Let’s dive in.

It may seem like common sense, but every time you go to transfer money to a new recipient in your banking app or on your bank's website, make sure you double check the following:

• The recipient's BSB (Bank State Branch) and account number
• Alternatively, the recipient's PayID is accurate

What about the account name you may ask? That’s simply used for recording purposes, so the really important parts to get right are the aforementioned information and details.

So, the worst has happened and you’ve mixed up your friends details while trying to send them money for dinner. What should you do?

Technically, transferring money to the wrong bank account is called a mistaken internet payment and the process involved if you do make one is laid out in the ePayments Code. This code is administered by the Australian Securities and Investments Commission (ASIC). 

The ePayments Code is a pretty long read. The short of it is that you'll want to contact your bank as quickly as possible when you realise your mistake. The faster you get in contact with them, the more likely it is that you’ll get your money back. Here are the timeframes you'll want to be aware of:

It’s been less than 10 business days

If you make a claim within the first ten business days of the transfer going through, your Authorised Deposit-taking Institution (ADI) will be obliged to return your money to you in full, so long as: 

• The bank is satisfied that a mistaken internet payment has occurred and; 
• There are enough funds available in the recipient's account. 

While the Code outlines that the recipient’s ADI must return the money to you ‘as soon as practicable', this could take up to ten business days. 

It’s been between 10 business days and 7 months

If you’ve left it more than 10 business days, or just didn’t notice your mistake in that period, things can get a bit more difficult. The recipient's bank is obliged to put a freeze on the disputed money and notify the recipient that they have up to 10 business days in which to prove they are actually entitled to the funds. If they can’t offer proof that the money is rightfully theirs, then the funds will be returned to you.

It’s been over 7 months

This is where it gets really tricky. According to the ePayments Code, if it's been over seven months since you transferred money to an incorrect account then the recipient of your funds isn't actually obliged to return the funds to you. Their bank is obliged to ask them, but the recipient must provide consent before any funds can be taken out of their account.

Plenty of Aussies use BPAY as a convenient way to pay their rent or energy bills. However, mistaken BPAY payments are not covered by the ePayments Code, but there are some steps you should take if you enter the Biller Code or Customer Reference Number (CRN) when making a transfer via BPAY. 

Your best course of action will be to contact your bank straight away, because there's a possibility that they may be able to reverse the transfer. It's also possible that if you've entered an invalid Biller Code or CRN that the transfer will not go through and the funds will be returned to you. 

If you haven't picked up your mistake straight away you should still contact your bank, because while there's no guarantee that they'll be able to return your funds, they will be able to help you lodge a dispute.

In Australia, we’re increasingly using mobile payment apps and Buy Now, Pay Later platforms like Afterpay, Zip and Beem for everyday transactions. While these platforms can simplify payments, they also come with the same risks as internet banking. Always verify the recipient’s details before hitting send, especially when transferring money to someone new.

If you encounter a problem or make a mistake, contact your bank and use the app’s help or contact functions to report the fault.

If you’ve made an erroneous transfer and your bank or credit union isn't providing you with adequate assistance to resolve the problem, you do have the option of lodging a complaint with the Australian Financial Complaints Authority (AFCA).

While a sudden windfall in your bank account or savings account may seem like a real stroke of luck, that money isn’t actually yours and you’ll have to pay it back. Get in touch with your bank to inform them of what’s happened and resist the temptation to spend it. You may face legal repercussions if you don’t report the error.

If you think you’ve been the victim of a financial scam, you can report it to the Australian Cyber Security Centre (ACSC). If your mistaken payment is linked to online scams or fraud, they can provide guidance on what to do next and help protect you from further issues.

To avoid these kinds of mistakes in the first place, consider implementing some of the following practices when banking online: 

• Set up alerts for transactions so you can monitor your account
• Enable two-factor authentication for added security
• Regularly review your transaction history for any unfamiliar activity
• Use strong, unique passwords for your banking apps and change them regularly
• Be cautious about using public Wi-Fi for banking transactions.

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