How to cancel a payment ?

There may be a couple of circumstances in which you intend to cancel a payment. In this article, we shall guide you in several different circumstances.

In a wire transfer, the sender sends money to their bank, their bank plays the role of a middleman and sends the money to the recipient’s bank, and finally the recipient’s bank credits the recipient’s account with the transferred funds.   

In a corporate context, wire transfers are often used to pay invoices, as the maximum limit tends to be high and you can transfer a large amount of money at a time. They are famous for international transactions because it is easy to exchange for foreign currency. Also, it is preferred if your company needs to complete a transfer urgently, as wire transfers are often processed in a timely manner. 

Nevertheless, the rapidity of wire transfers can at the same time bring risks to your company, especially when you encounter fraud. You have to understand that there are minimal chances for your money to return to your account, once the recipient has accepted the transfer. You can always try to act fast and call your bank immediately to request a recall. If it was the bank’s mistake, the reverse could be done, but if it was your mistake, chances are that you will take liability for the fraud. Circumstances in which it can be considered as the bank’s mistake include: 

Some transfer services such as PayPal, Remitly, and Veem allow you to cancel or reverse a transfer or open a dispute after a claimed transaction. However, in most cases, scammers retrieve the fund as soon as they receive them, making it highly unlikely for you to reverse the payment. Therefore, you had better double-check the recipient’s information before initiating a wire transfer, for example, with Sis ID’s help.  

ACH payments often process on the same day or in up to two business days. According to National Automated Clearing House Association (NACHA), in three circumstances, your bank will be allowed to reverse your ACH payment, within five business days of the original transaction:  

Reversals must be originated by the originator, which is the entity requesting a transfer. That’s why you should quickly contact the entity who charged the payment within 24 hours of the error’s discovery. 

If you would like to revoke your authorization of a recurring ACH payment, you will need to request that they stop taking automatic payments by phone or in writing. In order to prevent your bank from allowing funds to leave your account, you will need to contact the bank at least three business days before the payment date. Though this can be accomplished by phone or in person, a request submission in writing is required within the following 14 days.  

You may want to ask, what if you as a company experienced a fraudulent ACH transfer? We would like to remind businesses to be especially careful when it comes to ACH transfers. As a matter of fact, business accounts are not covered by American federal consumer protection laws. Therefore, the responsibility of preventing fraud falls on the shoulders of companies. You need to think of ways to verify the exactitude of the account details of your recipient using payment securitization tools for example.

Pre-authorized payments are arrangements you make with a creditor or merchant to automatically withdraw funds from your account on a regular basis, such as for a monthly subscription. 

As a matter of fact, your card issuer doesn’t have the authority to cancel a pending payment until it’s finalized. That’s why you will need to skip your card issuer, and directly contact the merchant who placed the charge as soon as possible, preferably within one or two days. The merchant will be able to order your card issuer to release the funds. In order to convince the merchant, you will need to gather all the transaction data you have, including details of the product or service, order number, charge information, and so on. You may also need to document all written and verbal conversations with the merchant. 

If you notice a pending transaction that you don’t recognize, which can be a fraudulent purchase, it is important to contact your card issuer, to help you monitor the transaction and reduce your liability if, unfortunately, this charge still eventually posts. 

Reversing a finalized transaction is actually easier than canceling a pending one in the United States. With the existence of the Fair Credit Reporting Act (FCRA), you have the right to dispute charges for billing errors, including unauthorized charges such as fraud, online or in writing. Banks are required to acknowledge a disputed transaction within 30 days following the reception of the complaint. Then they are obliged to resolve this dispute within 90 days following the complaint.