The Sueddeutsche Zeitung daily said on Wednesday, without citing its sources, that German banks had stopped PayPal payments totaling over 10 billion euros ($11.7 billion) due to fraud fears.
After lenders discovered millions of questionable PayPal direct debits that surfaced last week, the payments were suspended on Monday, according to the publication.
A PayPal representative who was asked to comment on the allegation stated that “certain transactions from our banking partners and potentially their customers” had been impacted by a brief service outage, but that the problem had been fixed.
The value of bank-stopped payments ranged from hundreds of millions to billions of euros, according to a banking source who spoke on condition of anonymity.
Scammers attempting to steal money from banks are typically filtered out by the digital payments giant’s security mechanism.
However, the Sueddeutsche Zeitung said that late last week, the system was either totally or mostly broken, causing the payments app to send banks unauthorized direct debits.
“We quickly identified the cause and are working closely with our banking partners to ensure that all accounts have been updated,” the PayPal spokesperson said.
In contrast to generally flat signs for the major Wall Street indices, shares of the U.S.-based payment app were 1.9% lower at $68.89 following market opening.
In a statement released on Wednesday, the Savings Banks and Giro Association of Germany, which represents over 300 regional savings banks and financial service providers, claimed that PayPal’s unauthorized direct debits had a “significant impact on payment transactions” across Europe, particularly in Germany.
The association also stated that regulatory authorities had been notified of the incidents and that, as of early Tuesday, PayPal transactions for Sparkasse bank customers were proceeding as usual.
The BaFin financial authority in Germany acknowledged receipt of the information but provided no further details.
There are currently no significant ongoing interruptions that necessitate the regulator’s intervention, according to a representative for the CSSF regulator in Luxembourg, where PayPal Europe is headquartered. The spokesperson declined to comment on PayPal in particular.
