I looked into this as i was also confused. Found out that a scammer abused the system so they have had to disable it on new accounts I think. It's also absent in my options. Was hard to find any information about it in google. You may have to contact support to ask them to enable it on your account.
*Edit
Looks like you can only use paypal now if itch collects your payments for you, and after each payment you have to wait 7 days before you can cash it out.