According to reports, the suspect received Ksh 15,000 from an unknown sender through Mpesa but failed to reverse the transaction despite being repeatedly contacted.
The sender is said to have made several phone calls and sent messages requesting the return of the money, but the man allegedly ignored all communication and proceeded to use the funds.
After his efforts to recover the money failed, the sender reported the matter to police in Mombasa, prompting an investigation.
Detectives from the Cybercrime and Forensics Unit later took over the case and began tracking the suspect using digital traces linked to the transaction.
Police say the man was arrested at his home in Mombasa while carrying out his normal activities. He was taken into custody for questioning as investigations into the incident continued.
Authorities have confirmed that he is expected to be taken to the Mombasa Law Courts, where he will face charges related to obtaining money through fraudulent means.
Law enforcement officials have used the incident to remind the public that keeping money sent to them by mistake is a criminal offence.
They urged mobile money users to act responsibly and promptly return funds that are not intended for them to avoid legal consequences.
Cases involving mistaken Mpesa transfers have been reported more frequently in recent years, driven by the widespread use of mobile money services across Kenya.
Police say such disputes often end up in court when recipients refuse to cooperate.
The arrest serves as a warning that digital financial transactions are traceable and that failure to reverse wrong payments can lead to prosecution.
The suspect remains in custody as he awaits arraignment.
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