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Reading this article should answer all your questions: https://support.steampowered.com/kb_article.php?ref=8360-wejc-2625#PayPal
I've been using Paypal for ~3 years now, and i have this issue every now and then.
Upon asking Paypal support, they told me that this is their automated safety system, and there is no way to change that. (Apparently, this kicks in when you buy more as you usually do) I cant really explain their system, but thats what they told me. I also dont have a credit card, and refuse to get one just for paypal.
So you'll have to wait a few days, and it should work again. (Thats my experience)
some say that it is a sequrity system that can last a few days if you made a purcahse but i didnt really make any purchase recently, i only received a large sum of money on paypal, maybe that also activates the security cooldown not sure, although i only have that issue with steam, no other place
Edit: i found a solution, for me it was, when selecgint to pay Paypal, uncheck the box "save my information etc" and then it didnt ask me for credit card
The PayPal payment requires a backing source, like a CC or bank account attached to it.
That is not really true because i know people who use paypal on steam without ever having used a credit card linked to it at all, and also i do not have that problem paying with paypal anywhere else either, its only Steam that is the issue
The entire reason that Paypal exists in the first place is for people who do not use credit cards and do not want to involve bank accounts, its an alternative way of paying (mainly online) in my country almost nobody who uses paypal has a credit card,