A system failure at PayPal has resulted in unauthorized direct debits worth billions of euros being processed through European banks, primarily in Germany.
The German Savings Banks Association (DSGV) confirmed the “incidents involving unauthorized direct debits initiated by PayPal,” which occurred after the payment firm’s fraud-checking system reportedly failed.
According to the German newspaper Sueddeutsche Zeitung (SZ), the glitch on Monday allowed millions of suspicious payments to bypass PayPal’s filters and be sent to banks alongside legitimate transactions.
The DSGV reported that payments totaling approximately 10 billion euros (£8.6 billion) had to be blocked to prevent further financial losses.
A PayPal spokesperson acknowledged a “temporary service interruption” affecting “certain transactions” from its banking partners. The company stated that it has identified and resolved the issue and is working with its partners to update all affected accounts.
The DSGV confirmed that PayPal had assured them the problem was fixed and that transactions were now running normally. The incident had a “significant” impact on payment transactions across Europe, prompting the DSGV to inform supervisory authorities. Shares in PayPal fell by 1.9% following the news.