[Seungseop Song's Financial Light] "Oops, sent it to the wrong person"... Don't worry about remittance mistakes anymore

Forecast, Erroneous Remittance Refund Support System Implemented
Available for Amounts Between 50,000 and 10 Million Won
Refund Amount Varies Depending on Recovery Costs Even After Refund

Finance is difficult. It is filled with confusing terms and complicated backstories intertwined. Sometimes, you need to learn dozens of concepts just to understand a single word. Yet, finance is important. To understand the philosophy of fund management and consistently follow the flow of money, a foundation of financial knowledge is essential. Therefore, Asia Economy selects one financial term each week and explains it in very simple language. Even if you know nothing about finance, you can immediately understand these ‘light’ stories that turn on the ‘light’ of financial insight for you.

Photo by Financial Services Commission

[Asia Economy Reporter Song Seungseop] Have you ever made a remittance mistake? Everyone has probably experienced accidentally entering the wrong account number when sending money in a hurry. It can be overwhelming to figure out how to get the money back if a large sum goes to the wrong person. But now, you don’t have to worry. Starting in the second half of the year, the ‘Mistaken Remittance Refund Support System’ has been implemented to make it easy to recover money sent by mistake.

The Mistaken Remittance Refund Support System is a program where the Korea Deposit Insurance Corporation (KDIC) helps recover money sent by mistake on your behalf. The KDIC directly obtains the contact information of the recipient, then guides voluntary returns or issues payment orders. This allows for easy and quick recovery of funds.

This system was implemented following the Financial Services Commission’s revision of the ‘Depositor Protection Act Enforcement Decree.’ It was introduced as a measure to address the increasing number of mistaken remittances due to the rise in non-face-to-face financial transactions. According to the Financial Services Commission, 200,000 mistaken remittances occurred last year, and half of them?101,000 cases?were not refunded. Previously, you could request a refund through financial institutions, but if the recipient refused, you had to file a lawsuit. The litigation process usually took over six months, and the estimated legal costs exceeded 600,000 KRW per 1,000,000 KRW.

Of course, not all mistaken remittances are refundable. First, only mistaken remittances that occurred after the system’s official launch on July 6 of this year are eligible. Mistaken remittances before the implementation date are not supported. Also, applications must be made within one year.

The refundable amount ranges from 50,000 KRW to 10,000,000 KRW. Amounts under 50,000 KRW are excluded because the recovery costs could be higher than the amount itself. For amounts exceeding 10,000,000 KRW, considering litigation costs, it may be more efficient to pursue a lawsuit directly.

Carefully Consider Eligibility, Procedures, and Recovery Costs

Photo by Financial Services Commission

Additionally, refund support is only available if the money was sent to a financial institution’s account. If the money was sent to an account of a simple remittance service provider, support is not available. Simple remittance service providers refer to entities registered with the Financial Services Commission to issue and manage prepaid electronic payment instruments and provide remittance services, such as Toss or KakaoPay. Sending money via contact transfer through the Toss application or member-to-member transfers on KakaoPay are typical examples where refunds are difficult.

If you want to receive support for mistaken remittance refunds, you must first request a refund from the recipient through the financial institution. If the refund is not made, the KDIC assists with the refund process. You can apply by accessing the refund support site on the KDIC website. If you cannot apply personally, a proxy application is also possible. This year, applications can only be made via PC, but a mobile app application site will be launched next year. It is also possible to apply in person by visiting the KDIC headquarters consultation center.

However, even when you actually receive the refund, you will not get the full amount. ‘Recovery costs’ such as postal notification fees and labor costs are deducted. Therefore, recovery costs may vary by individual. According to the KDIC, if voluntary return procedures are followed, about 86% of 100,000 KRW is expected to be refunded, and about 82% if a payment order is issued. For 10,000,000 KRW, the expected refund rates are 96% and 92%, respectively.

Although faster than before, the Mistaken Remittance Refund Support System still takes time. The KDIC verifies the recipient’s resident registration number and contact information upon receiving the refund application. The voluntary return and payment order procedures must also be completed. It is expected to take about one to two months from the date of application. If there is no refund after the payment order, forced execution may be necessary, which could take more than two months.

This content was produced with the assistance of AI translation services.