Can you point me out the ones that do? The popular exchanges of that list I know don't, except Bisq.
They have to pay for the back end upkeep
The back end only costs a small fraction of what they charge. Most of this must come from the space they rent. And judging by the rentals nowadays, it's understandably expensive. Customer support is also an expense to consider, right.
Those are all fixed, if they have 0 customers for a couple of days, the people still want to get paid, the stores still collect rent and so on. The KYC is independent of all of that.
It's independent, but it was their only weapon to compete CEX, until recently. They don't have future now more. As I said, you can get the exact same service from a centralized exchange, and much cheaper. And I don't blame them. Regulators must be pushing them.