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The rules of Itch are clear

I think it is a little bit more complicated than that. Obviously you can pay for nsfw content with something like paypal, otherwise you would not be able to pay on Steam for that type of content. Or am I misinformed about that? Same with Patreon. Lot of smut there too. Or can't US citizens pay for their cartoon smut on patreon?

Also, paypal does not even ban nsfw content. It bans cigarettes though. But you have to have approval according to their tos. And I guess they would deny that approval depending on your location and if you are a business with valid tax information or just an amateur. But if given you could sell actual real life porn downloads/streams with friggin paypal. Yes, there are sites that do sell that and you do can pay with paypal there. So this whole cartoon smut situation is ridicoulous. Itch should business up and do it like the grown ups or at least offer an optional way of handling this, instead of driving business to Patreon, Steam, Nutaku and others.

The gumroad thing, well, they disallow a lot of content, like homemade food. But you also can sell a lot more stuff there.

With all due respect Redonihunter.

Many of the things you say are valid and very interesting to talk about, but they are offtopic and overcomplicate an answer.

If you comply with paypal's content rules, and also comply with itch's rules, you will have no problem.

If you do not comply with Paypal, but you comply with Itch and there is a problem, your account may be removed from the Itch payment system. And this has happened before, you can search the itch forum history. That's clear.

We can debate whether X content complies or does not comply with Itch or Paypal rules. But I understand that that is not the purpose of the question and therefore it is offtopic.

How strict these rules will be and how they will be applied is something only Leafo can answer.

You tried to simplify it by saying the rules are clear. The rules are anything but clear.

Selling directly is not the same as having itch act as the merchant. One does not "sell" the game to itch so they can sell it to the customer. It is not a transitive chain of equal rules. Itch is an approved seller of adult items. They can collect money for this via paypal.

If you would somehow violate terms of paypal in this scenario, you could not sell it directly either. Obviously.

In the discussion a year ago when many developers where bumped down to direct payment, it was worded with the merchant aspect. Itch does not want to act as merchant in some cases. Note however, that it was not worded that they cannot act as merchant because of any tos violations.

The problem as I see it is the payout from itch to the developer. I wonder how patreon does it. They collect money for the exact same games via paypal, that have been bumped down from collected to direct.

If you comply with paypal's content rules

But ... what are the rules for business to business transactions? The tos you can look at are business to consumer rules and there you absolutely can sell adult content (conditions apply). So what information does this give us, if you blanket say, just comply to the rules and everything will be fine? To me it gives zero information.