I am not sure Agency want goverment know how much much money enter!!!
I'm sure that's part of it. I'm equally sure that even an agency that was scrupulous about accounting and taxpaying would still not want to use payment methods that could incur chargebacks. "Honey, what's this charge for Hannah's House of Hos and this other one for Felicia's Fellatorium?!" "Oh, no! Someone's got my card number!" "Well, let's call WonderCard right now." I'm told that sexually-oriented businesses have the highest rate of chargebacks.
Clients typically have their own reasons for not wanting to use credit/debit cards or cheques. For many, the use of cash presents its own problems since the method of obtaining cash can become obvious to partners. I can see how PayPal might help with this.