1/ they're not the only one. The dev of Knightly Passion did a similar thing, and I have no doubt others are to follow
2/ Simply put, Steam is big enough to negotiate with Paypal and dictate their term. That's not the case for a single dev.
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Paid version cancelled due to itch.io policy changes comments · Replied to SeamusGD in Paid version cancelled due to itch.io policy changes comments