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The acquiring bank that PayPal uses have apparently removed the use of currencies outside of those you listed on Steam. Both PayPal and Steam are trying to solve this problem, but have no estimate on a fix.
Can be found posted at the bottom: https://steamhost.cn/help_steampowered_com/en/faqs/view/731C-13C7-7D04-A11E
And the way around it is simply to link you paypal to an account in the core currencies.
It's not PayPal, it's an acquiring bank they use for other currencies that is refusing the transactions. Until PayPal either convince that bank to stop being stupid, or they replace it with another one, this problem won't be properly fixed. Keep in mind, the same issue can affect other stores, too.
Thats a hard blow for all the haters who raged about EPIC for years.
Guess you never read it
It does indeed say its coming from Paypals side, not Steams.
Not from PayPal?
Epic doesn't allow porn of any kind, so they were never in danger of acquiring banks used by PayPal deciding to stop doing business with EGS.
I would guess that epic itself is supporting less currencies then Steam, and therefore fall back to USD in those which they do not use local currencies.
Was the same case for steam back in the day before they slowly added local currencies starting 2008 or so....
Epic support 44 currencies and 52 regional pricing regions.
Steam offers 37 currencies and 41 regional pricing regions.
PayPal is not a transactions handler like Mastercard and Visa. You actually store money on their accounts and then you use their accounts to pay for stuff on Steam.
PayPal is in a way a bank. So they put the restrictions on Steam.