Accidentally transferred money to the wrong bank account? Don't panic, you may still be able to get it back.

A simple typo when entering a BSB or account number can send your money to a complete stranger, and the clock starts ticking the moment it happens.

The good news is that mistaken bank transfers can often be reversed or recovered. But your chances of getting the money back generally fall the longer you wait to report the error.

Whether you've sent $50 or $5000 to the wrong account, acting quickly is crucial. Banks have specific processes for dealing with mistaken payments, and there are strict timeframes that can affect the outcome.

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

If you do accidentally make a transfer to a valid account, you should contact your bank as soon as possible. The chance of recovering the money decreases the more time goes by.

The Australian Financial Complaints Authority (AFCA) outlines the timeline associated with recovering mistaken internet payments based on the ePayments Code:

• Within 10 business days: The funds will be returned to you if the unintended recipient hasn't withdrawn the funds.
• Between 10 business days and seven months: The recipient's bank will freeze the funds. The recipient will then have 10 business days to show they are entitled to the funds. If they do not, the funds will be returned to you.
• After seven months: The funds will only be returned if the other person agrees to return them. Even if you prove the funds are yours.

What if someone spends money sent to the wrong account?

If you've transferred money to the wrong account and the receiver has already spent some or all of the funds, things can get trickier.

In short, if both banks agree that a mistaken payment has occurred but there aren't enough funds in the recipients' account, the recipients' bank can decide whether to try and recover the full amount, part of the amount or not pursue it at all.

That decision needs to be based on the interests of both the sender and the recipient. For example, the bank may consider any financial impact on the unintended recipient if they pursue some or all of the funds, or whether recovering the money would overdraw the account.

Where can you turn if your bank isn't helping?

If your bank or credit union isn't playing ball and helping you resolve a mistaken payment, you can make a complaint to the financial ombudsman, AFCA.

It's always worth trying to resolve the issue with your financial institution first before lodging a complaint with AFCA though.

What about BPAY mistakes?

Putting in the wrong biller code or customer reference number when paying a bill using BPAY is just as easy as typing in the wrong BSB or account number.

Unlike transfers from one bank account to another, BPAY payments aren't covered under the mistaken internet payments section of the ePayments Code. The advice is still the same though.

Customers should get in contact with their bank or financial institution straight away. The difference is banks may have their own processes and timeframes when dealing with mistaken BPAY payments.

What if the payment was part of a scam?

The ePayments Code makes it clear that a mistaken internet payment is one in which someone has typed in an incorrect BSB or account number, or selected the wrong identifier from a list.

That means that - like BPAY payments - the obligations and timeframes laid out for mistaken internet payments don't apply to scams.

So, what should people who have been tricked into transferring money to a scammer do?

The first course of action, according to Moneysmart, is to contact your bank immediately and to have any transactions frozen. Your bank may then be able to provide you with additional advice.

How is new banking technology preventing payment errors?

The good news is that new technology and banking features are making it easier for people to get the details right for their intended account transfers.

PayID

Since the launch of the New Payments Platform (NPP) and PayID in 2018, Australians have been able to transfer money using a recipient's mobile number or email address which is linked to their bank account.

Beyond reducing mistakes that can crop up when typing in a BSB and account number, users are also shown the name linked to the PayID before they approve a transfer.

Confirmation of Payee

Australian banks and financial institutions have also been rolling out a new security feature called Confirmation of Payee since July last year which is designed to reduce scams and mistaken payments.

When making a transfer, customers can input an account name, BSB and account number as usual. But with Confirmation of Payee, the bank will check these details and alert the customer if they match, if the account name is similar (but doesn't quite match) or if there's no match.

How to avoid sending money to the wrong account

As always, prevention is the best cure when it comes to mistaken payments. Before making a transfer, consider the following:

• Take it slow and double-check the recipient's details (account name, account number and BSB), plus the transfer amount, before hitting confirm
• If you're planning on sending a larger sum of money, it may be worth conducing a test by transferring a very small amount first
• Make use of features like PayID and Confirmation of Payee (if available) which offer stronger safeguards

Interested in learning more about the new technology Australian banks are rolling out to keep customers safe? Check out our article on the best banks for customer service and scam protection.

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