none of this is fair or accurate - it's highly misleading to say the least.
the processing (transaction) charges are applied only when transactions are completed (automatically with full-auth or manually with pre-auth). merchants have the option to use pre-auth and reject / ignore fraudulent orders without incurring any transaction fees whatsoever.
if the merchant authorises a transaction that is later charged back, it's entirely the merchants responsibility.
Then please explain why they never set up an account with pre-auth. That's how I got stung. For over £3000. WORLDPAY PROCESSED IT, NOT ME.
the card holder pays the first £50 of any claim, and the card issuer (or their insurer / underwriter) pays the rest.
The card issuer pays the rest? Absolute bollocks. The £100 goes BACK to the card issuer. THEY GET THE MONEY BACK - THINK ABOUT IT. They money is NEVER LOST. It goes back down the chain it started from.
And I don't care where the money goes - it's profit for the card issuer, merchant or Visa/Mastercard/AMEX.... The VAT issue is true of any business transaction.