It follows the bank's failure to send out thousands of annual statements, which would have reminded customers of their right to cancel.
Those affected over the three-year period have been offered a refund of their premiums, plus 8% in interest.
Barclays said the issue had affected less than 3% of its PPI customers in total.
It is estimated a typical customer might receive several hundred pounds of refunds.
Barclays agreed to make the payments after the intervention of the Competition and Markets Authority (CMA).
"The annual statement was an important measure resulting from the market investigation, which ensures customers know they have a PPI policy, how much they are spending on it, and reminds them of their right to cancel or switch," said Adam Land one of the CMA's senior directors.
Most of those affected are credit card customers, although 740 hold mortgage accounts with Barclays.
The bank said that of 10,000 customers they have contacted, so far only 100 have opted for a refund.
"Last year we identified a number of Barclays and Barclaycard customers who, due to a technical issue, had not been sent their annual PPI statements," said a Barclays spokesperson.
"We have written to those customers to apologise and outline how we will remediate them where they believe they would have cancelled their policy, had they received the statements."
The bank said it had put controls in place to prevent the mistake happening again.
Barclays has sent letters to 10,000 of its customers, offering refunds for Payment Protection Insurance (PPI).