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If a payment your sender already released doesn’t reach you, for example because your bank rejects the deposit over a wrong account number or a closed account, the payment is marked as Returned on your inbound payments table and in the payment details. Returned is shown separately from Payment failed, which covers payments that never left the sender.

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The “Update your payment method” email

When a payment is returned, you receive a dedicated “Payment returned: update your payment method” email. This is different from the generic transfer-failed notification and is sent only to you, the recipient. The email asks you to sign in to Karat and update the payout method the return came back on so the sender’s funds can be redelivered.

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Updating your payment method from the returned payment

  1. Open your Payments Dashboard and click the returned payment in the inbound payments table.
  2. In the payment details, click Update payment method. This action only appears on returned payments that are eligible for an automatic resend.
  3. Complete the standard payout method setup. Choose a supported method (for example a different bank account, PayPal, or a crypto wallet) and submit the new details.
  4. Save the new method. Karat verifies it the same way it does during initial onboarding.
Once your new method is saved and supported, Karat automatically resends the original returned payment to it. You do not need to ask the sender to re-issue it. The resend appears as a new inbound payment linked to the original. Karat also triggers resends whenever you update your default payout method from Payment details or accept a new payment invitation from the same sender. Any previously returned payments from that sender that are still eligible are automatically retried against your new method, so you don’t have to open each returned payment individually.

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Fees on automatic resends

Automatic resends use a recipient-paid fee: any payout fee on the resend is deducted from the amount you receive, even if the sender covered the fee on the original payment. The sender’s original fee choice is not carried over to retries, so the net amount that lands in your new method may be slightly lower than the original gross amount.

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Minimum amount

Automatic resends are only available for returned payments of $100 or more. Smaller returned payments aren’t retried automatically; contact the sender to arrange a new payment. Karat is a fintech company, not an FDIC-insured bank. Banking and Card services provided by Grasshopper Bank, N.A., First Internet Bank of Indiana, and Cross River Bank, Members FDIC.