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Depending on how often the merchant is bitten by fraud, they can require to see an ID card for certain types of transaction (such as cash or check), or raise prices to cover the fraud costs.

Generally, they try to ensure that the liability shift is on the bank's side, by using an EMV capable system for most payments. Of course, that usually requires them to have a specific contract; banks, on their side, perform a risk assessment to ensure that they won't be covering too much fraud.