Yup, that's essentially how the system works.

One reason that can work in the US is because there is so much money slopping around in the system from high interchange/network fees. An issuing financial institution may bear most of the risk of fraudulent transactions, but the revenue of interchange fees is easily 10x that of fraud.

So, there are aligned incentives to keep the system secure which ends up being friendly to the individual consumer, but it comes at a cost because consumers bear this cost in the form of opaque fees in everything they buy.