diff --git a/src/components/KYCWall/BaseKYCWall.tsx b/src/components/KYCWall/BaseKYCWall.tsx
index a83314234ea9..7a770dcf0533 100644
--- a/src/components/KYCWall/BaseKYCWall.tsx
+++ b/src/components/KYCWall/BaseKYCWall.tsx
@@ -117,7 +117,7 @@ function KYCWall({
                         const {reportID} = moveIOUToExistingPolicy(policy, iouReport) ?? {};
                         if (reportID) {
                             Navigation.navigate(ROUTES.REPORT_WITH_ID.getRoute(reportID));
-                            savePreferredPaymentMethod(iouReport?.reportID ?? '', policy.id, 'Iou');
+                            savePreferredPaymentMethod(iouReport?.policyID ?? '', policy.id, 'Iou');
                         }
 
                         Navigation.navigate(ROUTES.BANK_ACCOUNT_WITH_STEP_TO_OPEN.getRoute(policy.id));
diff --git a/src/components/SettlementButton/index.tsx b/src/components/SettlementButton/index.tsx
index 8f1f8546e245..9f3a3d249db4 100644
--- a/src/components/SettlementButton/index.tsx
+++ b/src/components/SettlementButton/index.tsx
@@ -81,10 +81,9 @@ function SettlementButton({
     const [isUserValidated] = useOnyx(ONYXKEYS.USER, {selector: (user) => !!user?.validated});
     const policyEmployeeAccountIDs = policyID ? getPolicyEmployeeAccountIDs(policyID) : [];
     const reportBelongsToWorkspace = policyID ? doesReportBelongToWorkspace(chatReport, policyEmployeeAccountIDs, policyID) : false;
-    const policyIDKey = reportBelongsToWorkspace ? policyID : CONST.POLICY.ID_FAKE;
-    const lastPaymentMethodSelector = policyIDKey === CONST.POLICY.ID_FAKE && iouReport?.reportID ? iouReport?.reportID : policyIDKey;
+    const policyIDKey = reportBelongsToWorkspace ? policyID : iouReport?.policyID ?? CONST.POLICY.ID_FAKE;
     const [lastPaymentMethod, lastPaymentMethodResult] = useOnyx(ONYXKEYS.NVP_LAST_PAYMENT_METHOD, {
-        selector: (paymentMethod) => getLastPolicyPaymentMethod(lastPaymentMethodSelector, paymentMethod, iouReport?.type as keyof LastPaymentMethodType),
+        selector: (paymentMethod) => getLastPolicyPaymentMethod(policyIDKey, paymentMethod, iouReport?.type as keyof LastPaymentMethodType),
     });
 
     const [policies] = useOnyx(ONYXKEYS.COLLECTION.POLICY);
diff --git a/src/libs/actions/IOU.ts b/src/libs/actions/IOU.ts
index d5889f3304ce..f412fd2b721d 100644
--- a/src/libs/actions/IOU.ts
+++ b/src/libs/actions/IOU.ts
@@ -8850,7 +8850,7 @@ function completePaymentOnboarding(paymentSelected: ValueOf<typeof CONST.PAYMENT
         true,
     );
 }
-function payMoneyRequest(paymentType: PaymentMethodType, chatReport: OnyxTypes.Report, iouReport: OnyxEntry<OnyxTypes.Report>, full = true, usedPolicyID?: string) {
+function payMoneyRequest(paymentType: PaymentMethodType, chatReport: OnyxTypes.Report, iouReport: OnyxEntry<OnyxTypes.Report>, full = true, paymentPolicyID?: string) {
     if (chatReport.policyID && shouldRestrictUserBillableActions(chatReport.policyID)) {
         Navigation.navigate(ROUTES.RESTRICTED_ACTION.getRoute(chatReport.policyID));
         return;
@@ -8870,8 +8870,14 @@ function payMoneyRequest(paymentType: PaymentMethodType, chatReport: OnyxTypes.R
     API.write(apiCommand, params, {optimisticData, successData, failureData});
     notifyNewAction(Navigation.getTopmostReportId() ?? iouReport?.reportID, userAccountID);
 
-    if (usedPolicyID && iouReport?.reportID) {
-        savePreferredPaymentMethod(iouReport?.reportID, usedPolicyID, 'lastUsed');
+    // Save the payment method used for the report
+    // If the report is from a workspace, we use the policyID
+    // Otherwise, we use the policyID from the iouReport
+    // Otherwise, we use the paymentSelected
+    if (iouReport && iouReport?.policyID) {
+        const usedPaymentOption = paymentPolicyID ?? paymentSelected;
+        const reportType = iouReport?.type ?? 'lastUsed';
+        savePreferredPaymentMethod(iouReport?.policyID, usedPaymentOption, reportType as ValueOf<typeof CONST.LAST_PAYMENT_METHOD>);
     }
 }