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The costs are distributed evenly, in the form of the markup on all products that covers the interchange fee and losses to charge backs.

You do pay them, but in small undetectable increments all the time instead of random surprise large losses.

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Which is vastly superior to the alternative, which is taking on the liability myself and facing the possibility of being financially devastated by fraud and/or theft.

The best alternative is a system where the bank still carries the liability but the system is harder to defraud (i.e. because it does push instead of shared secrets authorizing pull).

So kind of like insurance?

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