> ... how do you square that with one category of business causing way more chargebacks than average?
Simple: Liability shift.
The liability shift is what spurred merchants in the U.S. to finally, albeit begrudgingly, modernize by upgrading their terminals to take chips and NFC. They did so because the cost of not doing so was too high. Some hold outs exist, but they are quickly realizing their error in calculation.
Liability for card-not-present transactions and your typical our-word-against-theirs dispute has always been entirely on the merchant. The card issuing bank just facilitates the dispute resolution. Banks pocket the interchange fees either way, so who cares about the rest? About as neutral as you can be, setting aside the fact that the cardholder is the bank's customer (because they are also the merchant's customer).
Liability for fraudulent in-person (card-present) transactions was on the bank, which is why banks make such a big deal about fraud detection. There's no liability for a transaction that is denied. However, since the liability shift, fraud liability for card-present transactions is only on the bank if the merchant is using a new chip or NFC terminal when the customer presents a chip- or NFC-capable card. Swipe a chip card, and it's back on the merchant.
In the end, theoretically, you have merchants and banks both interested in quality of service and fraud prevention.
Do they just have to eat it? Or can they charge higher fees to those merchants? If the latter they could quickly use that to discriminate. $100/tx fee would kill most any normal business.
Perhaps the problem is the government doesn’t provide a non-cash lowest common denominator, so people are basically forced to use Visa/MC?