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BERLIN — German banks halted PayPal transactions worth more than €10 billion this week after a failure in the company’s fraud-checking system allowed suspicious direct debits to bypass standard security protocols, according to reporting by Süddeutsche Zeitung.
The disruption occurred when PayPal’s fraud detection filters were either fully or partially disabled, resulting in a surge of unverified payment requests sent to banks. Financial institutions flagged the activity and blocked the transactions to prevent potential fraud.
Germany’s Savings Banks and Giro Association confirmed that the incident had a “significant impact on payment transactions” across Europe, with Germany particularly affected. PayPal acknowledged the service interruption and stated that the issue has since been resolved.
Regulatory authorities, including Germany’s BaFin and Luxembourg’s CSSF—where PayPal Europe is headquartered—have been notified. While no formal investigation has been announced, the incident has prompted increased scrutiny of digital payment systems and their safeguards.
Shares of PayPal declined following the news, reflecting investor concerns over operational resilience and regulatory oversight.
Excerpts from reporting by Reuters and Süddeutsche Zeitung.
Paypal Hq Picture by Heute
