Human error is to blame for a transaction error which caused thousands of Westpac customers to miss payments, be overcharged and overpaid early yesterday.

A spokeswoman for the bank confirmed a error caused by staff had misaligned transaction verification processes for a batch of accounts in the bank's back-end payment systems.

The financial impact of the mistake is expected to cost 'many millions', however the bank shot down media reports that faulty payments were upwards of $1 billion.

Wetspac is "most of the way through" reimbursing affected customers, almost 24 hours after the incident, and will continue revoking over-payments and reimbursing those underpaid or charged overdraw fees.

"We have a formal processes in place to make sure a any customers impacted won't be out of pocket and are working with other banks to understand the impacts on their customers," she said.

IBM, which has a 10 year IT outsourcing deal with the bank, could not comment on whether any part of the error occurred on its side.