Large-scale PayPal withdrawals halted abruptly

PayPal Suffers Security Breach, Affecting Thousands of Merchants and Customers

In a recent incident, PayPal, the leading online payment service provider in Germany, experienced a security breach that affected numerous merchants and customers. The vulnerability in PayPal's security system allowed criminals to exploit the platform, making unauthorized direct debits via the guest payment feature.

The supervisory authorities have been informed about the incidents at PayPal. The German Savings and Giro Association (DSGV) confirmed the incident and reported cases of unauthorized direct debits from PayPal to various credit institutions. These direct debits were withdrawals from customers' bank accounts after online purchases.

PayPal, a U.S. payment service provider with its European headquarters in Luxembourg, experienced a failure in its security system designed to filter out fraudulent direct debits. As a result, PayPal submitted all direct debits to banks without checking them, leading to a temporary service interruption that affected certain transactions of its bank partners and their customers. The failure resulted in banks stopping direct debits totaling tens of billions of euros.

However, PayPal has since fixed the issue, and the payment traffic to and from PayPal on the Sparkassen financial group's side has been running normally since Tuesday morning. Consumer advocates advised PayPal customers to check their PayPal accounts for unauthorized debits. According to PayPal's help page, the issue has since been resolved.

It is important to note that this incident does not affect PayPal's contactless payment feature at the checkout. Cash remains ahead of card payments in Europe, and PayPal's dominance in the online payment market, with a share of around 30 percent in online purchases, underscores its importance in the digital economy.

In a separate development, PayPal's competitor Wero won ING as a partner. Despite this setback, PayPal continues to be a trusted name in online payments, and it is expected to bounce back from this incident.

Criminals repeatedly try to trick banks and financial service providers like PayPal to steal money from their victims' bank accounts using fake direct debits. It is crucial for users to remain vigilant and check their accounts regularly for any unauthorized transactions.

PayPal encourages its users to report any suspicious activity to their customer service immediately to ensure the security of their accounts and funds. The company is committed to maintaining the highest level of security for its users and will continue to work towards improving its systems to prevent such incidents in the future.