A programming error in a local update triggered widespread PayPal payment disruptions in Germany, prompting banks to allegedly freeze billions of euros in transactions, though Luxembourg remained largely unaffected.

A significant technical error at PayPal caused widespread payment disruptions in Germany, though Luxembourg was largely unaffected, according to the company. The issue, which a spokesperson attributed to a programming error in a local system update, reportedly led German banks to freeze billions of euros in transactions as a precautionary measure.

The situation began when German media reported that banks had unilaterally halted all PayPal payments after identifying a surge in suspicious direct debit requests. The banks reportedly noticed that the transaction volumes appeared incorrect and opted for a blanket suspension.

PayPal later confirmed the root cause was a glitch in a Germany-specific update, where a piece of code was accidentally omitted. This error bypassed standard transaction verification checks before requests were sent to banks for processing.
While the total value of frozen payments was not officially disclosed, German media estimated the figure to be in the billions.

A PayPal spokesperson stated that fewer than 5% of its German customers were impacted. The company, which operates under a Luxembourg banking licence, is now processing legitimate transactions and expects to resolve issues for customers within days. Reimbursements to merchants may take longer, though the company asserts they are insured against such losses.

The glitch also attracted "criminal opportunists" who attempted to exploit the system's temporary vulnerability to divert funds. PayPal clarified that these fraudulent attempts appear unrelated to previously reported incidents of customer data being sold online. The company maintains there is no evidence its systems suffered a data breach.

Nevertheless, PayPal advises all customers to remain vigilant against phishing attempts, regularly update their passwords, and enable two-factor authentication for added security.