In brief
European banks, particularly in Germany, are grappling with unauthorized direct debits related to PayPal accounts. This issue has escalated to a reported 10 billion euros in blocked transactions, prompting the German Savings Banks Association to call for regulatory attention. PayPal's fraud-checking system failed, leading to a cascade of suspicious charges being processed. The company has acknowledged the disruptions and is working to resolve the issue, while regulators are also being informed. The situation has had significant implications for banking transactions, especially in Germany.
European banks have seen widespread unauthorised direct debits from PayPal accounts, the German Savings Banks Association (DSGV) says.
The German newspaper Sueddeutsche Zeitung (SZ) reports that payments worth around 10 billion euros (£8.6bn) have had to be blocked due to failures in PayPal's fraud-checking system.
Payments were paused on Monday when lenders reported millions of suspicious direct debits from the payment firm.
The DSGV confirmed to the BBC there had been incidents involving unauthorized direct debits initiated by PayPal against various credit institutions.
The BBC has approached PayPal for comment.
According to reports, PayPal stated to Reuters that certain transactions from our banking partners and potentially their customers were affected by a temporary service interruption.
They added, We quickly identified the cause and are working closely with our banking partners to ensure that all accounts have been updated, confirming that payment transactions have resumed.
The DSGV noted that while the situation has been rectified, these incidents have caused significant disruption to payment transactions across Europe.
PayPal aims to filter out scams before they can be processed by banks; however, the effectiveness of its security system came into question when it reportedly failed on the day of the incidents. Shares in PayPal fell 1.9% following the outbreak of the issue.
