Exact same issue for me. Popped up all of a sudden.
In my case i solved it by not setting the merchant-id at all since i use standalone buttons and as per documentation: https://developer.paypal.com/sdk/js/configuration/#merchant-id

Don't pass a merchant ID, because it is automatically derived.

In the console i still get the warning though: Payee(s) passed in transaction does not match expected merchant id. Please ensure you are passing merchant-id=xxx or merchant-id=xxx to the sdk url.

In the past we got: Payee(s) passed in transaction does not match expected merchant id. Please ensure you are passing merchant-id={ID} or merchant-id={EMAIL}

So maybe something has changed on their end and they dont allow email anymore?