Catenaa, Wednesday, September 03, 2025- PayPal last week experienced a system glitch that prompted several European banks to temporarily freeze billions of euros in transactions, causing widespread disruption for merchants and customers last week.
The issue affected direct debits and delayed payments across Germany and other European countries.
The disruption emerged after PayPal submitted a wave of direct debits without full fraud checks, triggering alerts in banking systems.
German lenders, including Bayerische Landesbank, Hessische Landesbank, and DZ-Bank, halted transactions after detecting unusual activity. Reports suggest the total impacted amount could exceed €10 billion.
PayPal confirmed a temporary service interruption and stated it was working closely with banking partners to resolve the problem and ensure all accounts were updated.
A notice on PayPal’s support page indicated the issue has since been resolved, though reconciliation for merchants may take several days.
While no fresh cyberattack was involved, the incident follows recent concerns over millions of stolen PayPal account details appearing on the dark web, raising questions about the platform’s security.
For merchants, delayed payments meant cash flow interruptions, while customers maintained control of their funds.
Analysts say the incident underscores the critical need for robust fraud detection and processing systems, particularly for platforms managing billions in digital transactions daily.
