Basically all these browsers support International Domain Names (IDN) that let you use the full Unicode set of foreign characters and symbols, and some of these foreign characters while technically different from the Latin ones look identical. In the case demonstrated they have used the Arabic a to replace a Latin a in “PayPal” to get another site. This isn’t really anything new, even the original RFC commented on how this would be a problem and the IETF issued guidelines that would have limited their scope if only Verisign actually implemented them. (Specifically the guideline for preventing mixing of languages within a domain name would reduce the scope for attack considerably).
One thing that is amusing is the Internet Explorer fan boy reaction that their browser isn’t susceptible. This is true but only because Microsoft hasn’t added IDN support to IE, instead recommending you install a third-party plug-in to do it.
Head over to Verisign, install the plug-in, and you too can have exactly the same “exploit”.
Some 12 hours later it appears the rest of the world twigs and Secunia issues this advisory.