I'm not sure I agree with your last point. The merchants have historically been powerless but the merchant side bank ends up patching things up to fix it's own

I'm not sure I agree with your last point. The merchants have historically been powerless but the merchant side bank ends up patching things up to fix it's own costs. Often this patching means penalizing merchants with products that are fun to buy fraudulently for failures that originated or could only have been detected at the buyer's bank.