I am an online retailer. I lost $8,000 in one season from credit card fraud.
Credit cards are insecure. They have weak fraud prevention built into them. This is by design, because the credit card company never pays for the cost of fraud.
Here is the order in which fraud is paid for: 1) the customer doesnt notice and pays for fraudulent charges on their card. 2) the customer complains, but the card company accuses them of not following their agreement to secure the card and the customer pays for it. 3) the merchant is accused of accepting a card without properly verifying the integrity of the purchase and the merchant pays.
Notice that in all cases the card company pays nothing for fraud. This is the reason that credit card are insecure. The card companies always make money from fraud.
The final reason that card companies like fraud is because they use fraud as a marketing tool. First they make an insecure system that allows fraud to take place, and then they tell the customer that they will secure them against it by refunding them. But as you can see above, they never pay for it, the merchant does, and subsequently the customer does by paying for higher margins built in by the merchant to cover the percentage of fraud orders.
You see, the card companies want you to believe that online purchasing is insecure by nature. This is not the case. Instead, it is designed into the credit card payment system, because there are no competing options for customers to pay for goods online AND the card companies make more money when fraud occurs. IMO: this is a huge mistake, and the card companies are setting themselves up for a secure payment system to take away their total online business (like: bitcoin)