Thanks for setting this up. These things change all the time as usual. Although i don't particularly like some of the new T&C i have to now agree with:
Allow PayPal to connect your account with itch.io
By clicking "Agree and Connect" you instruct itch.io to access your transactional data from PayPal and you allow us to communicate with itch.io so that we can process your customer's payments.
Automatically deduct their fee from each PayPal transaction prior to the remaining balance settling to your PayPal account. The fee amount is subject to your agreement with itch.io
Share my PayPal dispute data with itch.io, which I manage in the PayPal Resolution Centre
Allow itch.io to manage PayPal disputes and chargebacks, and itch.io to furnish any information and supporting documents to PayPal on my behalf.
I agree that PayPal may rely solely on the information and supporting documents provided by itch.io to adjudicate the dispute or resolve a chargeback. Treat itch.io's decisions in favour of my buyers in buyer disputes adjudicated by itch.io, to be used as a basis for reversing payments made to me
Transfer data to PayPal which enables PayPal to process transactions. itch.io may also confirm to PayPal that transactions are to be processed. Transfer data to PayPal which enables PayPal to process the transaction, which includes specific amounts for transactions previously authorised by the buyer. Instruct PayPal to return transactions on my behalf. Search through and access PayPal transaction-related data
So much for being the "merchant of record" !!