My cousin in Europe carries around 600euro and this is considered normal.
This is certainly not an amount considered normal for every-day usage here in Germany, and I seriously doubt this is the case in any other European country.
Also note that in Europa, there is the EC card (currently being renamed to girocard or some such) - essentially a regular bank card that you can pay with, either with PIN code (also requires commission, but less than credit cards) or with signature (allowing direct debit and agreeing to pay fees caused by cancelling that direct debit).
And last, but not least, there's also the GeldKarte (money card) - another application on your bank card that you can load small amounts of money for micro payments, accepted at some vendin machines and some shops - it didn't reach the popularity the banks anticipated, but almost any bank card carries the GeldKarte logo.
All in all, there's pretty much no place for PayPal in Europa - except for people believing the "buyer protection" mythos and smaller mechants. But small amounts are still frequently paid in cash - why give banks an additional share coupled with a slow down in the paying process?