Retailers set to receive payouts totaling billions of dollars from Paypal
PayPal, the popular online payment service, has been embroiled in a major crisis after a significant breach in its security systems led to fraudulent debit transactions worth billions of euros.
The breach, which occurred nearly a week ago, resulted in PayPal's filtering system for fraudulent debit transactions failing, allowing transactions exceeding one billion euros and hundreds of millions in smaller transactions to go through. These transactions were for purchases made online where PayPal withdraws money from customers' bank accounts.
As a result, many banks in Germany stopped forwarding debit transactions from PayPal's bank in Luxembourg, totaling in the tens of billions of euros. The German Savings Banks Association (DSGV) and PayPal are working towards completing all necessary processes to resolve the issue by mid-next week.
The high amounts of these fraudulent transactions were quickly noticed by the banks, leading to the blocking of many transactions nationwide. Tens of thousands of these transactions now need to be individually reviewed. PayPal is working to help affected users regain access to their funds as quickly as possible.
In addition, some transactions had to be processed again due to the previous disruptions, and this is being done both automatically and manually in individual cases. All legitimate transactions by merchants will be fully refunded, according to a PayPal spokesperson.
The German Banking Industry Committee has advised consumers to regularly check their account transactions for unauthorized debits. PayPal faced criticism from consumer advocates for causing confusion with emails to users about account coverage and processing fees.
The German banks or savings banks with the highest number of PayPal blocked transactions were those within the Sparkassen-Finanzgruppe. Unauthorized direct debits from PayPal affected various credit institutions, leading to the blocking of transactions worth billions of euros, as confirmed by the German Savings Banks Association (DSGV) during the PayPal security system outage in late August 2025.
Thomas Groß, CEO of Landesbank Hessen-Thüringen (Helaba), mentioned the normalization of payment traffic in his half-year results. The payment traffic between PayPal and banks has been running normally since Tuesday, under close observation.
It's important to note that the news from Hamm does not pertain to the PayPal issue and includes reports on a massive party by the Hamm Fire Department, high unemployment rates, and a widespread internet outage.
The situation is under control, and both PayPal and the German banks are working diligently to resolve the issue and ensure the safety and security of customers' funds. Users are encouraged to monitor their accounts closely and follow the advice of their banks for any further updates.
