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

Long gone are the days when you would be required to whip out your wallet or cheque book to repay money to a friend or pay a bill. Thanks to the invention and uptake of internet banking and online bank accounts, transferring money to friends, family or a business has never been easier. 

Despite the convenience which online banking provides, there is one snag: transferring money to the wrong account is a whole lot easier. So what happens if you transfer money to the wrong bank account, and what can you do about it? Let's get into it.

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 (short for Bank State Branch) and Account Number

• Or the recipient's PayID

What about the Account Name you ask? That’s just used for recording purposes, so the really important parts to get right are the aforementioned bits of information.

So, the worst has happened and you’ve mixed up your friends details while trying to send them money for dinner. Aside from assuring them that you will pay them back, 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 Australian Securities and Investments Commission (ASIC). 

The ePayments Code is a pretty long read though, so the short of it is that you'll want to contact your bank as quickly as possible when you realise your mistake! That's because 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 though:

1. It’s been less than 10 business days

If you make a claim within the first ten business days of the transfer going out, your bank will be obliged to return your money to you in full, so long as there are enough funds available in the recipient's account. While the Code outlines that your bank must return the money to you 'as soon as practicable', this could be up to ten business days. 

2. 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, then things get a little 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.

3. 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. Basically your funds are completely in their hands at this point.

Plenty of Aussies use BPAY as an easy way to pay their rent or energy bills, so is there any difference between making a mistake using BPAY compared to one with your regular bank account? Unfortunately there is. 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. 

Once again, 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. 

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. So get in contact with your bank to tell them what’s happened and resist the temptation to spend it!

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Not satisfied with your current banking situation? If you're ready to make the switch to a new account then head on over to the Mozo bank account comparison hub where you'll be able to compare options on everything from account fees to payments options and more. 

You may also be interested in having a look at some of Australia's best banks accounts as judged by the Mozo experts.