Contrary to popular belief, merchants are responsible for frauduluent charges, big or small. They pay not only in any lost merchandise or services, but also in losing the payment.

This shifting of burden ultimately comes back to the consumer in higher costs and fees, and is just a cost of business for the merchants. The credit card company beneifts because they make money regardless of fraud, and they’ll make increased money from the detachment of the feedback loop from the consumer. Merchants don’t pursue fraud because they simply increase costs to cover it.

In this scenario merchants lose, consumers lose, credit card companies win from increased usage.