PayPal Technical Issues in Germany to Have Limited Impact: Raymond James

PayPal experienced technical issues in Germany, causing several large banks to halt payments. The issues have since been resolved, and Raymond James estimates a 10 bp headwind to Q3 Branded TPV growth for each day of disruption. The firm believes there will be no material impact, but frames the potential Branded headwind as it is an important metric for the stock. Raymond James maintains a Market Perform rating on the shares.

PayPal Holdings Inc (PYPL) encountered technical issues in Germany, leading several large banks to halt payments. The problems, which were reported by the Sueddeutsche Zeitung [1], caused a temporary disruption in transactions totaling over 10 billion euros ($11.7 billion). The issues were resolved, but Raymond James estimates a 10 basis point (bp) headwind to PayPal's third-quarter Branded Total Payment Volume (TPV) growth for each day of disruption [2].

The technical issues involved millions of suspicious direct debits from PayPal being flagged by banks. A PayPal spokesperson confirmed a temporary service interruption but stated that the issue had been resolved [1]. The disruption affected certain transactions from PayPal's banking partners and potentially their customers. Germany's Savings Banks and Giro Association, representing over 300 local savings banks, noted the significant impact on payment transactions, particularly in Germany [1].

Raymond James, maintaining a Market Perform rating on PayPal shares, estimates that the disruption could create a 10 bp headwind to PayPal's third-quarter Branded TPV growth. However, the firm does not expect any material impact to transaction margin or earnings per share from this temporary disruption [2]. Germany represents approximately 5% of PayPal's total TPV, with about 60% of that volume being Branded [2].

Despite the temporary issues, PayPal reported its second-quarter earnings, exceeding expectations in headline revenue, transaction profit, and non-GAAP earnings per share [2]. Analysts, however, expressed concerns about transaction margins and a slowdown in branded online total payment volume growth, partly due to tariffs [2].

PayPal's strategic shifts, including commerce platforms, BNPL expansion, and crypto adoption, aim to drive growth despite margin pressures [3]. The company's undervalued metrics and $6 billion in buybacks signal potential value for patient investors, while its strong balance sheet positions it to weather macroeconomic headwinds [3].

References:
[1] https://www.reuters.com/business/finance/german-banks-halted-10-billion-euros-paypal-payments-fraud-concerns-says-2025-08-27/
[2] https://www.investing.com/news/analyst-ratings/paypal-stock-faces-temporary-disruption-in-germany-raymond-james-notes-93CH-4213165
[3] https://www.ainvest.com/news/paypal-2026-growth-outlook-strategic-shifts-buybacks-drive-comeback-2508/