PayID Scam: How to Identify and Avoid PayID Scam

PayID is a function offered by over 100 banks and financial institutions across Australia that allows you to send money to somebody using their phone number, email address or another identifier. Instead of entering complicated BSB and account numbers, you simply use a memorable identifier linked to your bank account.

PayID was launched in 2018 as a function of the New Payments Platform (NPP), a system designed by banks to allow for faster transactions in Australia. The service was created with security in mind, displaying the recipient’s name before you confirm payment, thereby helping prevent misdirected transfers.

Benefits of Using PayID

PayID offers several advantages over traditional bank transfers, which explains its popularity amongst Australians:

• Speed and Convenience: Transfers happen almost instantly, typically within 60 seconds, eliminating the wait times associated with conventional bank transfers.
• Fraud Prevention: The name verification feature displays the recipient’s registered name before you complete a transaction. This real-time checking significantly reduces the risk of sending money to the wrong person.
• Simplified Transactions: You no longer need to remember or accurately type 15 digits (BSB and account number). Simply use a mobile number or email address, reducing human error in the payment process.

Feature	PayID	Traditional Bank Transfer
Speed	Under 1 minute	1-3 business days
Scam Protection	Name verification	None
Cost	Free	May incur fees
Error Risk	Low (familiar identifiers)	Higher (15-digit entry)
Availability	24/7	Business hours dependent

Also: Read: How to Set Up Instagram Two-Factor Authentication: Step-by-Step Guide

PayID Scams

Despite its security features, scammers have found ways to exploit PayID by targeting people’s lack of familiarity with how the system works. Scamwatch reported that Australians lost $260,000 to PayID impersonation scams in 2022, while between January and July 2024, over $15.8 million was lost through buying or selling scams. These figures represent only reported cases, meaning actual losses are substantially higher.

The most common PayID scam Australia residents encounter occurs on online marketplaces like Facebook Marketplace and Gumtree, where criminals pose as buyers interested in purchasing your listed items. These scammers capitalize on PayID’s trusted reputation whilst exploiting confusion about its operation. They create elaborate deceptions involving fake emails, fabricated payment issues, and non-existent account “upgrades” and some kinds of Myths to trick sellers into sending money.

Common Myths Scammers Exploit:

• Myth: PayID requires a “business account” upgrade to receive payments
  Reality: PayID is free; no upgrades or special accounts exist
• Myth: You need to pay fees to activate PayID transfers
  Reality: All PayID transactions are completely free
• Myth: PayID contacts you directly via email or SMS
  Reality: PayID never communicates directly; all contact comes through your bank

Your Knowledge of these lies is important because PayID impersonation tactics rely entirely on creating believable scenarios around these non-existent requirements.

How It Works

Understanding the complete scam process helps you recognize it at any stage:

1. Initial Contact: The scammer responds quickly to your listing, often within minutes of posting. They express strong interest and agree to your asking price without negotiation.
2. PayID Request: They ask if you accept PayID, positioning themselves as a legitimate buyer using a trusted payment method. They may provide reasons why they prefer PayID (convenience, security, etc.).
3. Email Collection: The scammer requests your email address, claiming they need it to complete the PayID transfer. In reality, legitimate PayID transactions only require a phone number or email as an identifier, not both.
4. Fake Email Delivery: Shortly after providing your email, you receive an official-looking message claiming to be from PayID or your bank. The scammer will claim the transaction couldn’t be completed because you don’t have a PayID “business” account.
5. Upgrade Fee Demand: The fake email states you need to upgrade your account or pay a verification fee. They’ll claim they’ve sent extra money to upgrade the account, send you a fake email as evidence and pressure you to reimburse them.
6. Payment Pressure: The scammer applies urgency, claiming they need the item quickly or that their “extra payment” is pending your action. They may contact you through multiple channels to increase pressure.
7. Disappearance: Once you send money (if you fall for the scam), the criminal vanishes. Their profile may be deleted, and they stop responding to messages. No money will ever appear in your account.

Critical Fact: PayID never contacts you directly via email, text or messenger. PayID is managed by your bank. Any communication claiming to be from PayID is fraudulent.

What to Look Out For

Recognising the warning signs of a PayID scam can save you considerable money and distress. Watch for these red flags when selling items online:

• Instant Response and Zero Negotiation: Scammers contact you very soon after you’ve posted your ad, wanting to buy the item without inspecting it or negotiating on price. Real buyers typically ask questions, request additional photos, or haggle over the price.
• Someone Else Will Collect: These scammers will insist someone else will be picking up your product due to work or other conflicts in their schedule. The buyer claims their brother, friend, or relative will collect the item, allowing them to avoid meeting you in person.
• PayID Payment Insistence: Scammers are eager to pay for the item straight away without seeing it and say someone else will come and pick it up later. They only want to pay using PayID and refuse to consider other methods like cash or bank transfer.
• Fake Communication: After agreeing to PayID, you receive emails or text messages claiming there are issues processing the payment. They may send text messages and emails that look official but contain grammatical errors or suspicious sender addresses.

Checklist of Warning Signs:

• New or suspicious Facebook/Gumtree profile (recently created, no history)
• Buyer located far from your area but claims easy collection
• Refuses to view item before purchase
• Agrees immediately to asking price
• Insists on PayID exclusively
• Requests your email address “for PayID”
• Claims urgent need to complete transaction
• Mentions account upgrades or verification fees

What to Do If You Suspect a Scam

If something feels wrong during a transaction, trust your instincts and take immediate action:

• Pause the Transaction: Stop all communication with the buyer immediately. Do not send any money or provide additional personal information. Legitimate buyers will understand if you need time to verify details.
• Check Your Bank Balance: Log into your online banking directly by typing your bank’s website address into your browser. Never click links in emails or messages. Verify whether any payment has actually arrived in your account. If no funds appear, you’re dealing with a scam.
• Block the Buyer: Use the marketplace platform’s blocking features to prevent further contact. Report the profile to Facebook Marketplace or Gumtree administrators, providing screenshots of your conversation.
• Document Everything: Take screenshots of all messages, emails, and any other communication. These may be valuable if you need to report the incident to authorities or if the scammer’s tactics evolve.

How to Confirm Your Suspicion

Verification is straightforward when you know what to check:

• Verify No Real Payment Exists: You don’t need to upgrade your account or click on any links in text messages or emails for the transaction to be processed. PayID transfers happen automatically without any action required from recipients beyond providing their identifier.
• Examine Email Headers: Inspect the sender’s email address carefully. Official PayID communications don’t exist, but if you receive emails claiming to be from your bank, verify the sender domain matches your bank’s official domain (for example, @nab.com.au, not @nab-service.com).
• Contact Your Bank Directly: Call your bank using the number on the back of your card or from their official website. Never use contact details provided in suspicious emails. Ask whether any PayID-related communications were sent by them.
• Report Suspicious Messages: If you receive a suspicious SMS claiming to be from your bank, forward it to the verification number. For Bendigo Bank customers, you can forward suspicious SMS messages to 0429 557 997 for investigation. Most major banks offer similar verification services.
• Check Official PayID Register: Visit your bank’s official website to understand how PayID works. The legitimate PayID information is available through your own bank’s website, not through any separate PayID website or service.

Common Online Marketplace Scams

Facebook Marketplace scams and Gumtree scams share similar tactics, though they may vary slightly in execution. Understanding these variations helps you stay alert regardless of which platform you use.

Facebook Marketplace Scams

In 2023 alone, more than $45 million was reportedly lost through fake buying and selling schemes in Australia. Facebook Marketplace’s vast user base makes it particularly attractive to scammers.

• Fake Upgrade Email Tactic: The scammer sends a convincing email claiming your account requires upgrading to a “business” PayID account. The email states they’ve sent extra funds for this upgrade and requests you reimburse them the difference. The email address looks official but typically comes from free email services rather than legitimate PayID domains.

• Overpayment Refund Scheme: The criminal claims they’ve accidentally sent more money than agreed and asks you to refund the excess amount. However, no actual payment ever reaches your account. The “proof” they provide is fake.

Gumtree Scams

Gumtree, being another popular classifieds platform, attracts similar fraudulent activity. The tactics mirror Facebook Marketplace scams but often target higher-value items like vehicles, electronics, or furniture.

Third-Party Collection Story: The buyer explains they’re unable to collect personally and arranges for a courier or family member. This creates distance between you and the supposed buyer, making verification difficult and providing an excuse for why they can’t meet in person.

Platform	Common Tactic	Loss Risk	Prevention
Facebook Marketplace	Fake upgrade email	High	Verify with bank directly
Gumtree	Overpayment refund request	High	Check actual account balance
Both	Third-party collection	Medium	Insist on meeting buyer
Both	Urgent payment pressure	High	Never rush transactions

Read also: 15 Top Payment Gateways providers: Comparison, Functionality and Benefits

How to Protect Yourself

Prevention is always better than dealing with scam aftermath. Implement these protective measures:

• Meet in Person When Possible: For local sales, arrange to meet buyers in public places during daylight hours. Shopping center car parks, police station forecourts, or busy cafés provide safe meeting locations. Cash transactions remain the safest option for face-to-face dealings.
• Verify Through Official Channels: Before accepting any PayID payment, ensure you understand how your specific bank processes these transactions. Different banks may have slightly varying procedures, so familiarise yourself with your institution’s specific process.
• Use Bank Guarantees for High-Value Items: For expensive items like vehicles or electronics, consider requesting payment via bank cheque or arranging the transaction through your physical bank branch where funds can be verified immediately.
• Enable Banking Alerts: Set up instant notifications through your banking app to alert you when funds enter your account. This allows you to confirm payment arrival in real-time rather than relying on the buyer’s claims.
• Avoid Remote PayID Sharing: Never share your PayID details with someone you haven’t met or verified. Whilst PayID itself is secure, sharing your details with unknown parties opens opportunities for various scams beyond the fake upgrade scheme.

Additional Tips for Small Business Owners:

• Verify ABN registrations through the Australian Business Register before accepting business-to-business transactions
• Use business banking features that provide additional verification layers
• Maintain records of all transactions and communications
• Consider implementing a “no PayID” policy for online-only transactions until you’ve met the customer

Key Protection Rules:

• Never send money to receive money
• PayID is always free; no upgrades exist
• Meet buyers in person whenever possible
• Verify payments in your actual bank account
• Keep all communications within the marketplace platform
• Trust your instincts if something feels wrong

Read also: How to Create an Email Address in 5 Minutes

What to Do If You’ve Been Scammed

If you’ve fallen victim to a PayID scam, act immediately to minimize damage and potentially recover funds:

1. Contact Your Bank Urgently: Time is critical when attempting to reverse fraudulent transfers. Call your bank’s fraud department immediately using official contact numbers. For example, Bendigo Bank customers should call 1300 236 344 for general enquiries and scam reporting. While getting money back after you have made a PayID transfer is difficult and may not be possible, banks can sometimes request reversals through the receiving institution.
   
2. Report to Scamwatch: File a report with the Australian Competition and Consumer Commission (ACCC) through Scamwatch. This helps authorities track scam patterns and potentially identify criminals. Your report contributes to national scam statistics and may help prevent others from falling victim.
   
3. Report to the Australian Cyber Security Centre (ACSC): The ACSC works with law enforcement to combat cybercrime. Report your experience at www.cyber.gov.au to contribute to broader cybersecurity efforts.
   
4. Freeze Compromised Accounts: If you’ve shared banking details beyond your PayID, contact your bank to freeze your accounts temporarily. Change your online banking passwords immediately and enable multi-factor authentication if you haven’t already.
   
5. Update Security Details: Change passwords for all online accounts, particularly those connected to your email address or phone number. If scammers have your email, they may attempt to access other accounts through password reset functions.
   
6. Report to the Platform: Notify Facebook Marketplace, Gumtree, or whichever platform was used for the scam. Provide screenshots and details of the scammer’s profile. Whilst platforms may not recover your funds, they can ban the user and potentially prevent future victims.
   
7. Document Everything: Keep detailed records of all communications, transactions, and actions you’ve taken. This documentation may be required for police reports or insurance claims.
   
8. Realistic Expectations: Be prepared that recovery may not be possible. Payments are almost instant and managed by each individual bank, making reversals extremely difficult once the scammer has accessed the funds. However, reporting remains essential for tracking criminal activity and potentially preventing future incidents.