> European banks have seen widespread unauthorised direct debits from PayPal accounts, the German Savings Banks Association (DSGV) says.
> The German newspaper Sueddeutsche Zeitung (SZ) says payments worth in the region of 10 billion euros (£8.6bn) have had to be blocked, after PayPal's fraud-checking system failed.
[0] I was impeded by cookie popups and adblock/privacy-mode blockers in another language, and neither are direct reports or superior details.
This article is useless. It seems like an English translation of some German blogspam (and the ads are even making it through my filter).
It says nothing other than PayPal is having some security failures and banks are blocking deposits from PayPal. What are these security failures? What is the mechanism of fraudulent activity that is being exploited?
I’m surprised this was upvoted so much… am I missing something? It seems to be a bunch of words saying basically nothing.
Arbitraging fraud has always been PayPal's game. For the mass market of small-scale sellers there's a threshold, whre the cost of onboarding, verifying, underwriting and eating fraud exposure is greater than the revenues you could ever expect to make from them at their low volume. So these segments went un-served, same with many other segments of transactions or transactors. PayPal's model has always been to accept a higher risk tolerance, then to have just-enough compensating controls and/or liability-dodging to make that work. At least just well enough to have net-revenues bps exceed their fraud-loss bps.
And when that balance is working, it kinda works, but when it doesn't...
And incidentally, it's not just PayPal with the fraud problems these days. It's everybody in the banking and payments space. AI is so far quite asymmetrically helping the bad guys more. It's bad out there.
That's a simplistic way of understanding "best interest."
The optimal amount of fraud is neither zero nor "let it all through." Their "best interest" is a balance between allowing legit transactions to get through and blocking enough fraudulent ones that fraud doesn't become too common.
Maybe it's different by country, but I feel like fraud isn't a huge issue for the end user anymore. A couple times I've had random transactions on my account seemingly from database leaks / stolen card details, and every time the bank has either sent me a notification asking me to approve the suspicious transaction, or has refunded me the amount later.
As long as you don't initiate the transaction, you get your money back easily.
Card networks have the most reliable protections and guarantees, their systems and rules are designed around consumer trust in their brand and zero-liability (to consumers).
Recently I found out that one of my friends had his identity stolen, thousands and thousands drained from his bank accounts. After thorough investigation it was traced to a PayPal breach, and he had to fight hard to get them to admit it was their fault. He got everything back, eventually, but the whole process was a nightmare.
PayPal very strongly tries to make you give them your full bank info (remember that the banking system has absolutely no security as the computer world knows it - this is a feature required for checking to work - so this means anybody with access to your bank id numbers in PayPal's records can do arbitrary transactions to/from your bank account). When I last used it it was possible to avoid on the buyer end and just use a credit card, but I haven't used it for years and I think it was different on the seller end even then.
It is worth remembering that PayPal not only handles payments but also provides a degree of assurance to receive the goods. A pure payment system does not. From a customer perspective this can provide real value as filing a claim with PayPal gets merchants definitely to listen more closely.
> It is worth remembering that PayPal not only handles payments but
It is _also_ worth remembering that PayPal not only handles payments but _also blocks acounts based on random issues_. A lot of people lost access to their Paypal accounts. /s
German, well West European, banks are slow in creating a competitor to Paypal, called Wero. https://en.wikipedia.org/wiki/Wero_(payment) I'm not implying they block Paypal because of that. It's good to have more competition and I wished my bank would take part.
German banks (and in general businesses) are amazing. They won't do anything until legally required to do so and even then will drag their feet. There has been instant bank transfers (transfers in 10 seconds) available for a while - launched in November 2017. German banks kept charging 1.5€ for this instant transfer or some didn't have them available at all. They didn't build any of these systems and yet this was their stand.
On January 9 2025, EU made it compulsory to have receipt of transfers instant and in October 2025 - sending too should be available at the same cost as the normal transfer. There's nothing stopping from implementing bot send/receive instant transfers in January 2025. Yet, some of these banks only enabled instant receipts in January and will make the sending available exactly on 8th October 2025, 1 day before the deadline. What a business mindset to have!
Have used them for a long time, never paid for them. GLS is a great bank, happy customer. The crappy ones like to keep your money in their books as long as possible.
The resistance against instant payments mostly has to do with technicalities around bank balance sheets and inter-bank settlement systems.
It's a bit complex for a comment, but the TLDR is:
* funds in transit (called "positive float") are held in the banks account, and can be used by the bank to earn interest
* liquidity management - there are a bunch of considerations here, but the longer settlement periods enable banks to do "deferred net settlements" (just paying each other the difference between all transactions in a batched way) and also helps balance sheets in other ways, making it easier to meet reserve requirements, smoothing out intra-day liquidity, etc
The delay also means systems have more time to catch fraudulent transactions, and to block them before they happen.
The existing giro system is the real Paypal competitor. Most Europeans had access to Paypal-style money transfers before they had email. Merchants probably want to rely on another party to maintain their integration, but there is no real need for another centralized service similar to Paypal.
(The U.S. really is an outlier among developed nations in that its giro system is not widely used, and many residents would not even know how to access it. Hence Paypal's network effect can offer value there. Europe is very different.)
> The existing giro system is the real Paypal competitor. Most Europeans had access to Paypal-style money transfers before they had email.
Not at all, not even close! In most cases, that's wrong even today.
Want to sell something online? A book you wrote, a game you made? There's no way for people to pay you via giro and automatically receiving the good on the page where the payment process was initiated.
Giro is not instant, and almost no bank will offer an API that signals that a specific customer has transferred funds successfully. It always takes hours, and the confirmation process is almost always only semi-automatic for the seller.
Visa/MasterCard/PayPal/Twint/Tikkie/Wero have and will provide actual value. Giro was nice 15 years ago, but hasn't kept up.
And even for money transfers between two private individuals, giro is the inferior system - mainly because Euro banks fail at UX/UI. I don't know a single bank that offers an "address book" in their online banking app/website. If you want to send someone money, you better remember their IBAN yourself. And because the system comes with a degree of anonymity, you can't even send people money back! Their IBAN is not part of the metadata of an incoming transfer, the only way to send money back is to contact that person and have them send their IBAN.
> Most Europeans had access to Paypal-style money transfers before they had email.
Bank transfers were not instant though, they usually took a work day. This is changing with the introduction of instant transfers, which become mandatory to support this year, and are also not allowed to be more expensive since this year also.
The U.S. really is an outlier among developed nations in that its giro system is not widely used
I wasn't even aware such a thing existed? Or do you mean Zelle, which seems to be some sort of hybrid system... It's not quite a giro system as found in most of EU, more like "PayPal, but built by BofA and CapOne"
For merchants selling stuff internationally on the internet, none of those local systems are any use. You pretty much need to use Paypal or similar - or even wire transfers if you don't mind the delay and inconvenience to the customer.
Portugal got mbway, Austria used to have paybox, there is iDEAL, sofort.com and generally besides the local country systems with de-facto European banks you get "SEPA Instant Credit Transfer" nowadays - however IBAN is "harder" to share than lets say the phone number your friends already got.
They never really had much of a reason to create a competitor. There where already plenty of alternatives once online shopping/payments became a thing.
Here you could do "cash on delivery", credit/debit card, account transfers (yes even across banks, it not as big an issue as US banks makes it) or you could send stamps (not a popular options).
There was never a need for PayPal or PayPal style services. These days it's safe to assume that people have a debit card (or MobilePay in the case of Denmark).
The + of PayPal was in 2005 when you could use it to hide your card number from the merchant.
But now, you can generate one-time use cards, which are safer than assigning a card on your PayPal account.
The other thing, is that you can do chargebacks more easily, when you buy on eBay, but this comes at the cost of higher fees (which is basically insurance)
Other than that, it's a platform that cannot be trusted
I strongly disagree. The main advantage of Paypal and the reason for its popularity in Germany was the fact that it provided instant payments at a time when credit cards were very uncommon.
Cash on delivery was a huge pain since you had to potentially large amounts of cash ready to hand over to your postman upon delivery. That's the opposite of convenient.
Alternatively you could pay by bank wire transfer, which of course led to an additional delay of a day or two until your transfer actually arrived at the sellers bank account. Nobody wants to deal with barriers like these in ecommerce. Paypal was a godsend back then. Remember, barely anyone had a credit card in those days in Germany.
At the time PayPal rolled out, the single feature that made it popular in the USA is that it provided eBay sellers an easy/cheap way to receive credit card payments from buyers. That is all. Any person could set up a PayPal and instantly start receiving credit card payments without setting up a vendor account with a credit card company (which was not trivial at that time).
The predecessor of Wero (iDeal) has been in use in The Netherlands for almost two decades. Nobody has credit cards here and everyone does online shopping with iDeal
To add, on top of iDeal (I think they're on top anyway, they're digital payment whatsits anyway) there's an age verification system using a similar protocol - where a website gets a "yes this person is >18" signal, nothing else, from the user's bank. And there's "tikkie" (payment request), allowing people to request money through a link and people's own bank account - no need for everyone to use the same apps or services like paypal or cashapp.
Wero looks very much like a bureaucratic paper tiger to me.
I do not know a single person that uses it despite the massive advertising campaign they are running.
What really replaces Paypal in my everyday life is Revolut.
Half of Europe has widely used national systems for instant payments, the other half does not. The idea behind Wero is to unify this to one single system, available across whole Europe. For reference, I use these systems for like 80% of my online payments.
Of course nobody's using Wero now because the whole thing isn't really online yet, just a pilot program on a few websites with a few banks.
Poland has Blik, it's amazing and I wish it existed everywhere - you can pay someone using a phone number or you can generate a Blik number that you can give anyone else to request or send a payment - and it's instant. Most stores accept Blik payments, and I've paid using it in places where bank cards are not accepted or where there is no infrastructure to accept them - just use Blik.
Wait till you learn about iDeal. Basically flawless online payments for 10+ years in the Netherlands. Dominates the entire online and offline markets. No cards, no signups, just your normal bank account.
P.S. lives in Germany 5+ years and can attest its banks and online banking are generations behind its neighboring countries. A travesty.
I got once my PayPal account blocked due to negative balance, but there was no transaction in the history and not even customer support was able to tell me why my account went to minus. They even sent me fairly threatening email and the whole process felt like a scam attempt.
Later on I found out that it was due to a bounced transaction 3 months earlier, but the fee for bounced transaction was not reported anywhere and my PayPal account balance just got changed to -5 eur. I've closed my PayPal account directly right after this incident and never used PayPal again.
Readit News
> European banks have seen widespread unauthorised direct debits from PayPal accounts, the German Savings Banks Association (DSGV) says.
> The German newspaper Sueddeutsche Zeitung (SZ) says payments worth in the region of 10 billion euros (£8.6bn) have had to be blocked, after PayPal's fraud-checking system failed.
[0] I was impeded by cookie popups and adblock/privacy-mode blockers in another language, and neither are direct reports or superior details.
It says nothing other than PayPal is having some security failures and banks are blocking deposits from PayPal. What are these security failures? What is the mechanism of fraudulent activity that is being exploited?
I’m surprised this was upvoted so much… am I missing something? It seems to be a bunch of words saying basically nothing.
And when that balance is working, it kinda works, but when it doesn't...
And incidentally, it's not just PayPal with the fraud problems these days. It's everybody in the banking and payments space. AI is so far quite asymmetrically helping the bad guys more. It's bad out there.
The optimal amount of fraud is neither zero nor "let it all through." Their "best interest" is a balance between allowing legit transactions to get through and blocking enough fraudulent ones that fraud doesn't become too common.
As long as you don't initiate the transaction, you get your money back easily.
It is _also_ worth remembering that PayPal not only handles payments but _also blocks acounts based on random issues_. A lot of people lost access to their Paypal accounts. /s
Handle with care.
On January 9 2025, EU made it compulsory to have receipt of transfers instant and in October 2025 - sending too should be available at the same cost as the normal transfer. There's nothing stopping from implementing bot send/receive instant transfers in January 2025. Yet, some of these banks only enabled instant receipts in January and will make the sending available exactly on 8th October 2025, 1 day before the deadline. What a business mindset to have!
It's a bit complex for a comment, but the TLDR is:
* funds in transit (called "positive float") are held in the banks account, and can be used by the bank to earn interest
* liquidity management - there are a bunch of considerations here, but the longer settlement periods enable banks to do "deferred net settlements" (just paying each other the difference between all transactions in a batched way) and also helps balance sheets in other ways, making it easier to meet reserve requirements, smoothing out intra-day liquidity, etc
The delay also means systems have more time to catch fraudulent transactions, and to block them before they happen.
(The U.S. really is an outlier among developed nations in that its giro system is not widely used, and many residents would not even know how to access it. Hence Paypal's network effect can offer value there. Europe is very different.)
Not at all, not even close! In most cases, that's wrong even today.
Want to sell something online? A book you wrote, a game you made? There's no way for people to pay you via giro and automatically receiving the good on the page where the payment process was initiated.
Giro is not instant, and almost no bank will offer an API that signals that a specific customer has transferred funds successfully. It always takes hours, and the confirmation process is almost always only semi-automatic for the seller.
Visa/MasterCard/PayPal/Twint/Tikkie/Wero have and will provide actual value. Giro was nice 15 years ago, but hasn't kept up.
And even for money transfers between two private individuals, giro is the inferior system - mainly because Euro banks fail at UX/UI. I don't know a single bank that offers an "address book" in their online banking app/website. If you want to send someone money, you better remember their IBAN yourself. And because the system comes with a degree of anonymity, you can't even send people money back! Their IBAN is not part of the metadata of an incoming transfer, the only way to send money back is to contact that person and have them send their IBAN.
Bank transfers were not instant though, they usually took a work day. This is changing with the introduction of instant transfers, which become mandatory to support this year, and are also not allowed to be more expensive since this year also.
I wasn't even aware such a thing existed? Or do you mean Zelle, which seems to be some sort of hybrid system... It's not quite a giro system as found in most of EU, more like "PayPal, but built by BofA and CapOne"
Portugal got mbway, Austria used to have paybox, there is iDEAL, sofort.com and generally besides the local country systems with de-facto European banks you get "SEPA Instant Credit Transfer" nowadays - however IBAN is "harder" to share than lets say the phone number your friends already got.
Also: https://wero-wallet.eu/fr/utilisateurs
Here you could do "cash on delivery", credit/debit card, account transfers (yes even across banks, it not as big an issue as US banks makes it) or you could send stamps (not a popular options).
There was never a need for PayPal or PayPal style services. These days it's safe to assume that people have a debit card (or MobilePay in the case of Denmark).
But now, you can generate one-time use cards, which are safer than assigning a card on your PayPal account.
The other thing, is that you can do chargebacks more easily, when you buy on eBay, but this comes at the cost of higher fees (which is basically insurance)
Other than that, it's a platform that cannot be trusted
Cash on delivery was a huge pain since you had to potentially large amounts of cash ready to hand over to your postman upon delivery. That's the opposite of convenient.
Alternatively you could pay by bank wire transfer, which of course led to an additional delay of a day or two until your transfer actually arrived at the sellers bank account. Nobody wants to deal with barriers like these in ecommerce. Paypal was a godsend back then. Remember, barely anyone had a credit card in those days in Germany.
Let’s say direct bank transfers are not counted. What alternatives are not based on Visa/Mastercard on global scale?
The predecessor of Wero (iDeal) has been in use in The Netherlands for almost two decades. Nobody has credit cards here and everyone does online shopping with iDeal
What really replaces Paypal in my everyday life is Revolut.
Of course nobody's using Wero now because the whole thing isn't really online yet, just a pilot program on a few websites with a few banks.
P.S. lives in Germany 5+ years and can attest its banks and online banking are generations behind its neighboring countries. A travesty.
Later on I found out that it was due to a bounced transaction 3 months earlier, but the fee for bounced transaction was not reported anywhere and my PayPal account balance just got changed to -5 eur. I've closed my PayPal account directly right after this incident and never used PayPal again.