Paypal: German banks apparently blocked payments of billions of euros

A "technical problem" at Paypal apparently caused security systems to fail. These are used to detect and filter fraudulent transactions. According to the Süddeutsche Zeitung, German banks had therefore stopped Paypal direct debits amounting to several billion euros.

As the SZ reports, several German banks stopped Paypal payments on Monday, possibly amounting to more than ten billion euros. According to the report, the banks had noticed that "many millions of direct debits" had been received from PayPal in the previous week, but these had suspicious or fraudulent characteristics. Paypal has more than 30 million customers in Germany whose payments are debited by Paypal from stored bank accounts or credit cards.

Paypal is repeatedly the target of criminal scams – shortly before Christmas last year , the North Rhine-Westphalia consumer advice center warned that criminals were going on a shopping spree via Paypal using other people's account details. According to information from the SZ, "at the end of last week" Paypal's security systems, which are supposed to filter out such fraudulent payments, failed "completely or for the most part". As a result, Paypal apparently passed on all direct debits to the banks without checking them.

The banks' security systems failed

This triggered the security systems of some banks, which detected inconsistencies. These banks then blocked all Paypal payments in order to prevent the unlawful debiting of customer accounts. Bayerische Landesbank, Hessische Landesbank and DZ Bank, for example, reacted in this way; the latter is the payment processor for the cooperative banks. As a result, retailers have not received their money and it is currently unclear whether this will also delay the delivery of ordered goods.

A large backlog has accumulated, some of which has to be processed manually. This could take a few more days. Paypal told heise online that everything is back on track. There was a technical problem, not a security problem, a company spokesperson said, citing a rather creative description for the fact that a security system was "technically" unavailable.

The financial services provider told SZ: "PayPal experienced a temporary service interruption that affected certain transactions of our banking partners and potentially their customers. We quickly identified the cause and are working closely with our banking partners to ensure that all accounts have been updated."

Yesterday, Tuesday evening, a transaction with Paypal via Sparkasse Gütersloh could not be processed successfully. There are also reports online that the problem has apparently not yet been fully resolved.

In the case of blocked direct debits, Paypal assumed that there was a shortfall in the bank account and, according to the transaction text, attempted to collect the outstanding amount within the following four working days – "including bank processing fee". It is currently unclear whether the company insists on this, although the error is due to its own IT failure. The PayPal account also displays a red alert: "Attention: The balance of your PayPal wallet is in the red." with a request to settle the amount.

(dmk)