The US payment service provider PayPal has been quite popular in Germany for years. However, currently both private customers and banks are grappling with a problem. According to the "Süddeutsche Zeitung" (SZ), certain security systems at PayPal have reportedly failed. These are the systems designed to filter out fraudulent transactions. As a result, various German banks are said to have blocked payments from PayPal as early as Monday. The SZ estimated the amount involved to be more than ten billion euros.

PayPal security systems down - direct debits submitted unchecked

PayPal is regularly exploited by fraudsters to get hold of citizens' money. The payment service's security systems are supposed to check and prevent such activity. However, these systems reportedly failed at the end of last week, causing PayPal to submit direct debits without verification.

Portals like "Netzwelt" also report disruptions with the payment service. The blog "Cashys Blog" mentioned technical issues over the weekend. For days, customers have allegedly experienced difficulties processing transactions. Payments via direct debit are primarily being rejected, despite the accounts reportedly having sufficient funds.

However, this might not be directly related to the PayPal disruption but rather due to the banks' reactions. According to the "Süddeutsche Zeitung," banks noticed the unusually high volume of direct debits from PayPal on Monday, which appeared suspicious or fraudulent.

Banks halted all PayPal transactions

To prevent a potentially multimillion-euro fraud, several banks reportedly temporarily halted all PayPal transactions.

According to information from the "Süddeutsche Zeitung" (SZ), these banks include "Bayerische Landesbank", "Hessische Landesbank", and "DZ-Bank".

As a result, numerous merchants did not receive their funds. The newspaper reports that the banks may have frozen more than ten billion euros. As stated by the news agency News5, not only online shop payments were affected; customers are currently experiencing difficulties using PayPal at supermarket checkouts and in retail stores as well.

According to PayPal, it was a "temporary service disruption." The company's site states: "Over the weekend, there was a temporary service interruption that led to delays in transactions for a small number of accounts. The issue has since been resolved."

Even though PayPal claims to have fixed the problem, the effects of the outage are still noticeably impacting merchants and consumers, as reported by News5. PayPal lists several services as "under maintenance" on its status page. When payments will resume smoothly remains unclear.

PayPal security systems down - impact across Europe

According to information from the German Press Agency (dpa), the incident has been confirmed by the German Savings Banks and Giro Association (DSGV). In recent days, there have been "incidents involving unauthorized direct debits from PayPal affecting various financial institutions," the association stated. "These incidents had a significant impact on payment transactions throughout Europe, particularly in Germany. This was noticeable to customers of the Savings Banks Finance Group institutions for several hours last Monday."

Consumer advocates recommend that PayPal customers check their accounts for unauthorized debits.

Focus Online also reports on a major update that PayPal has presumably been implementing since August 25. Whether there is a connection between the disruption and the planned update remains unclear at this time.

PayPal is by far the most important online payment service in the German market, accounting for just under 30 percent of online purchases.