2: PayPal/Stripe do have their one touch/sso stuff, if sign up with to that you'll have at least an indication if things go weird.
Otherwise you are right. It's a problem but it's a problem with the web, not specifically any payment processors which are all honestly doing anything they can to make these issues a non-issue.
Some feel that the correct approach is to whitelist TLDs that have a responsible homograph rule (so, not .com) and show punycode in all other TLDs. Others want to detect whether a name seems "confusing" by some heuristic and show the punycode instead only in that case.
It's not like you can just disable punycode for all sites, because now you just create a new phishing risk for those sites that used it (xn--pypal-something and xn-flge-something look close enough)