A guide to mistaken payments

It is easier than ever to make personal or business payments. We can choose to use electronic funds transfers (EFTs), contactless payments, PayPal, Apple Pay, Bankers' Automated Clearing System (BACS), Clearing House Automated Payment System (CHAPs) and so many more. However, as we enjoy all this comfortable convenience, there is always a nagging concern: what if I make a mistake? What if I type in the wrong account number or amount? Alternatively, what if I do not actually owe the sum that is taken from my account? Will I ever recover my money?

A mistaken payment is different from a fraudulent transaction, which is where a person or business is tricked into paying money to a criminal's account, rather than the genuine account that they intend to credit. It is usually an accidental transfer of money to a stranger who has no entitlement to it. This may happen because of a mistake made by the individual or business making or requesting a payment, or by their bank. It is also called a ‘misdirected payment’ or, in banking terminology, ‘misapplied funds’.