Is PayID safe?

Picture this. You've been trying to sell your sofa for months. You're desperate for a buyer. You've changed the price a few times hoping for a bite, but to no avail, no one wants to buy your sad beige couch. But then, you receive a message. Someone wants to come collect it – today! 

You're so rushed to offload the bulky piece of furniture that you realise you have no idea how PayID works. You know your friends have used it before, so it must be safe. You answer the buyer's questions and do what they ask of you. Now you're out $500 and you still have your couch. 

Even though PayID is safe, knowing how it works is key to protecting yourself and your money. 

PayID is a service that allows you to send and receive payments through your phone number, email address, or ABN instead of your BSB and account number. Most banks in Australia now accept PayID. All you need to do is take a few moments to set it up in your online banking app and link a phone number, email address, or ABN (if you’re running a business) to your preferred account. 

PayID aims to simplify the transfer of money. It's a quick, easy, and secure way to pay your friends back for your share of dinner or send a relative some money for their birthday. 

Yes! The same fraud detection system that protects payments made with your BSB and account number also applies to PayID. PayID has an added layer of security to prevent you from transferring to the wrong recipient. When making a payment, you’ll see the registered PayID name appear for confirmation. If the PayID name doesn't match the name of the friend or family member you’re transferring, call them on a trusted number to verify their details.

In 2022, Aussies lost $45 million through fraudulent buy-and-sell schemes, $260,000 of which was lost to PayID-specific scams. If you’re selling something on an online classified site like Gumtree or Facebook Marketplace, you’ll more than likely encounter a PayID scam.

To start, the scammer will contact you about the product you’ve listed. They might ask a question or two about the price or the product’s condition. Then they’ll jump straight to ‘Is it okay if my brother/relative/partner comes to pick it up?’

Next, they’ll request to transfer via PayID. Not long after you share your PayID details, you’ll receive a sketchy email or text message from an address or number claiming to be PayID. It’ll say that there was an issue processing your payment. Why? Because you need to ‘upgrade your account’, and in order to do so, you must send an additional payment to the buyer.

To the trained eye, there’s no doubt this is a scam. The scary thing is though, some messages can appear in the existing SMS thread you have with your bank. This can lull you into thinking it might be a legitimate text.

^{Images: SafeWise.com/au}

While PayID itself is safe, you should always proceed with caution. PayID scams often target people selling second-hand items via online marketplaces. If the buyer insists on using PayID, they’re likely a scammer. 

The best way to protect yourself is to know the warning signs. When using PayID, you’ll never:

• Have to send money first to receive a payment.
• Have to pay additional fees or upgrade your account to receive a payment.
• Receive texts, emails, or calls from PayID.

If you’ve fallen victim to a PayID scam, contact your bank right away. The sooner they’re aware you’ve fallen victim to a scam, the sooner they can stop any further transactions. We’d also recommend reporting the scam to Scamwatch, so they can help protect others from making the same mistakes.