My guess is it's even more popular outside the US, or anywhere where credit cards aren't that common - like europe. We link our banking account to Paypal and use it to have instant payments (and fulfillment) without credit cards. You can't expect people to own credit cards over here.
But many people are very reluctant about signing up with their debit card details with too many companies, at least I know I am.
Unlike CC you don't get a new number/have half a dozen of different ones of them. So it's a quite a bit more of a hassle should the payment service provider ever have a breach/leak.
Many people didn't like to sign up with PayPal to begin with but, due to its dominance with eBay it was a bitter pill most people just swallowed to do their eBay buying and selling.