You can void an Overpayment transaction that you have created by mistake.

In Xero go to Contacts > All Contacts
Find the Customer / Supplier Contact you have created the incorrect Overpayment transaction
Find the Overpayment transaction and click on the arrow next to the transaction, then select View
Once you clicked on View, the Overpayment transaction will open on the screen
Click on [Overpayment Options] > Void