Sure but that's something card networks already deal with via chargebacks. If merchants get caught doing that, they'll have their payment processor, the process

Sure but that's something card networks already deal with via chargebacks. If merchants get caught doing that, they'll have their payment processor, the processors acquirer and Mastercard/Visa all over them like a bad rash. You can guarantee that the merchants collateral, or any unpaid funds will be taken and used to automatically refund anyone that went near their readers, and if the money can't be claimed from the merchant, then the payment processor or acquirer will be forced to cough up. All the card networks take this type of fraud very seriously. They understand that they only get to keep their very lucrative positions in this world if people 100% trust card readers to not rip them off, and to get easy compensation if they do. So they come down hard on businesses that threaten that trust.