European banks have seen widespread unauthorised direct debits from PayPal accounts, according to the German Savings Banks Association (DSGV). The German newspaper Sueddeutsche Zeitung (SZ) reports that payments worth approximately 10 billion euros (£8.6bn) had to be blocked due to a failure in PayPal's fraud-checking system.
Payments were paused when lenders reported millions of suspicious direct debits from the payment platform. The DSGV confirmed to the BBC that there had been incidents involving unauthorized direct debits initiated by PayPal against various credit institutions.
The BBC has reached out to PayPal for comment. A spokesperson for PayPal stated that certain transactions from our banking partners and potentially their customers were affected by a temporary service interruption. They assured that the issue had been rectified and that payment transactions to and from PayPal were running normally again.
According to the DSGV, these incidents have had significant effects on payment transactions across Europe, particularly in Germany. The supervisory authorities have been informed of PayPal's incidents, which included the failure of their system designed to filter out scams before reaching banks.
The report also highlighted that shares in PayPal dropped by 1.9% on Wednesday following the incident. This failure exemplifies the challenges platforms like PayPal face in ensuring transaction security against criminal activities.
