Disruptions at PayPal and the search for European alternatives

In e-commerce, PayPal is the Most used payment service providers. This is partly due to its ease of use and partly due to its security measures. PayPal has earned the trust of consumers. Even though there have been minor problems over the years, mainly due to phishing and malware attacks on users, PayPal was still considered reliable and secure. This could now change. We take a look at the latest incidents and alternative European solutions.

A brief review

First things first: According to media reports, there has not yet been a classic hack of PayPal systems. The known fraud attempts were usually preceded by data theft from users through phishing or malware.

The most relevant incident occurred in December 2022, when around 35,000 accounts were compromised and data stolen as part of a credential stuffing attack. Attackers used login data previously stolen from users to gain access to accounts. PayPal informed the people affected and reset their passwords. However, the incident was only officially discovered a good two weeks later and passed on to the public prosecutor's office.

Access data on the Darknet

In mid-August 2025, hackers claimed to have stolen around 16 million PayPal credentials (email addresses and passwords, some in plain text) and offered them for sale on the darknet. Experts did not consider the cause to be a direct hack at PayPal, but rather the result of malware attacks on user devices in May 2025, which spied on stored logins (so-called info stealers). However, it is unclear whether this data is actually genuine. Users should still change their passwords and generally diversify them and activate two-factor authentication. Furthermore, they should keep an eye on both their account and the linked accounts or credit cards.

Failure of security systems

On August 23 and 24, there was the most serious disruption to date, which was caused by the failure of internal fraud filter systems. This led to a conspicuous number of fraudulent direct debits being passed through unfiltered. As a result, German banks stopped transactions worth around 10 billion euros. Although PayPal quickly rectified the error and promised compensation, the incident shook confidence in the payment service provider and triggered a discussion about European alternatives.

Alongside the technical disruptions, users reported numerous complaints: delayed direct debits, negative notifications in the PayPal account and a lack of communication. Phishing attacks and fraudulent calls also increased as criminals sought to exploit the uncertainty surrounding the outage. They pretended to be PayPal employees on the phone or sent fake emails with alleged account updates. The consumer advice center urgently warns against such fraud attempts and gives Tips for recognizing phishing messages.

The frustration also led to vociferous complaints from business customers. Otto temporarily suspended PayPal payments. The German Federal Office for Information Security (BSI) warns of potential risks with payment service providers and calls for transparency in security measures. The incident underlines the importance of robust infrastructures, proactive security measures and transparent crisis management - both on the part of the company and for users (e.g. through password hygiene, multi-factor authentication (MFA), education).

Wero as the European answer

The recent incident fueled political calls for a European payment infrastructure. Members of the EU Parliament emphasized the need to become less dependent on US services and highlighted the European project Wero as the first serious alternative. Similar to PayPal, the service enables real-time payments and works via email address or cell phone number, but is a European development and regulated according to EU guidelines. Wero is intended to offer consumers more security and sovereignty in the long term.

The system is based on the European Payments Initiative (EPI) and was launched in summer 2024. More than 30 banks in Europe are now members of the EPI and more are set to follow. Revolut also recently joined the initiative.

Online payments have been possible since 2025, but so far only for private transactions between participating banks. However, Wero aims to establish itself as the central payment solution for Europe. There are plans to extend the functions to e-commerce payments in the second half of 2025. From 2026, payments in stationary retail will be possible and the management of recurring payments and loyalty programs will be integrated.

The payment service aims to simplify transactions for merchants by combining instant bank transfers with a secure, consent-based model. It is based on SEPA Instant Credit Transfer (SCT Inst), which allows customers to pay directly from their bank account in real time through explicit consent - for seamless payments across all channels.

Although the start was a little bumpy, awareness is increasing thanks to a variety of marketing campaigns via TV commercials, social media campaigns and posters. Experts see great potential in the long term - particularly due to low costs, high security, use of existing SEPA infrastructure and possible integration into the digital euro.

What alternatives are currently available

There are a number of well-known European payment services for online retail. These include established options such as paydirekt and giropay as well as Klarna in the buy-now-pay-later area, but also Adyen, Mollie and fintech provider Revolut. There are also national providers such as Twint in Switzerland and Lydia in France. The digital wallet Skrill has established itself as a niche product, especially for online casinos, where payments are processed on a pre-paid basis. None of these offer a fully comparable solution to PayPal on a European scale (yet).

Conclusion

As things stand today, PayPal is in the lead - and will remain so as long as there are no equivalent European solutions. However, the myth has cracked and Wero has great potential to establish itself as an alternative and capture market share. To achieve this, the expansion to online retail must be driven forward quickly. The interest of European consumers in alternatives to PayPal is there and now is the right time to serve it.