The KDIC website for applying for the return of a mistaken remittance. (Photo: KDIC)

The Korea Deposit Insurance Corporation (KDIC) announced that the revised Deposit Protection Act will come into effect to introduce a wrong remittance return support system, in which the KDIC collects and returns money mistakenly transferred by remitters, starting from July 6.

The number of erroneous remittances has been on the uptick every year due to the popularization of non-face-to-face financial transactions, such as internet and mobile banking.

In fact, about 200,000 mistaken remittances occurred last year, but in about half of the cases, money was not returned to their remitters.

Until now, in the event of an erroneous remittance, the remitter asked the recipient to return the money wrongly transferred through the financial company.

If the money was not returned, the remitter could only collect the money through litigation.

As a result, the remitter was burdened with time and cost to receive the erroneously remitted money.

Therefore, in many cases where wrongly wired money was small amounts, the remitters gave up trying to get back their money.

If a remitter applies for support for the return of more than 50,000 won and less than 10 million won, the KDIC will collect the money instead of the remitter, starting from July 6.

But the remitter must apply for the service within a year from the time of the mistaken remittance.

Where a mistaken remittance has been made, the remitter can ask the receiver to return it through the financial company.

Unless it is not returned, the remitter may apply for support for the return of the money at the KDIC.

However, it is possible to apply for the return of money wrongly transferred through accounts of financial companies and prepaid electronic payment methods such as Kakao Pay and Naver Pay.

But if the recipient took a remittance through prepaid electronic payment methods, the remitter will not be able to apply for the service.

Remitters can apply for the service on the website of the KDIC or visiting the KDIC.

The amount of returned money is the balance of the money minus expenses, such as postal guidance costs, payment order-related stamp prices, delivery fees and labor costs, if the KDIC recovers money wrongly transferred money.

The return of an erroneous remittance is expected to take about one to two months from the date of an application, as the KDIC receives an application for return support and checks the recipient's information at relevant agencies and orders the recipient to return the money.

“The implementation of the Erroneous Remittance Return Support System will enable the KDIC to get its hands on recipients’ contact information and take steps such as giving voluntary return guidance or payment orders to recipients,” financial authorities explained.

KDIC opened the Erroneous Remittance Return Counseling Center on July 5th by utilizing the Customer Support Room to enhance convenience of those who use the erroneous remittance return support system.

The counseling center will not only provide face-to-face services for senior citizens and the marginalized who have difficulty applying for service on the internet using computers but counseling services on the support system.

The counseling center will open in the lobby on the first floor of the KDIC main building for visitors’ convenience.

“We expect the counseling center to make it easier for the vulnerable including senior citizens to use our erroneous remittance return service,” said Wi Seong-baek, president of the KDIC.

“We expect that our erroneous remittance return service will help those who wired money to wrong recipients by mistake to get their money back fast at low cost.”

Meanwhile, the KDIC has taken preemptive measures amid growing anxiety over the soundness of financial companies due to a recent spike in household debts and a move to raise the benchmark interest rate.

It has decided to cut back on deposit insurance premiums in the event of a sharp economic downturn and increase its discount and surcharge grades.

“We will change the Differential Insurance Premium System for financial companies from the current three-grade system to a five-grade system beginning from next year,” president Wi said.