I get the path the team has chosen and for the most of it I agree with it. At a certain point you have to start investing in awareness though.

You say new users won't be interested if they can't spend it anywhere. On the other hand, merchants are not interested if we don't have enough users (Dev says this himself). The only way to break through this vicious circle is to incentivize the markets a bit.

You invest in awareness to attract new users on one side and approach merchants with a good support package and clear benefits on the other. If a merchant sees there is a well thought marketing plan behind this initiative it will give him more trust to take the leap then if he only sees an awesome app without any support or promotion.

You can spend the next ten years trying to make things perfect, but at a certain point you will just get passed by lesser products that have done their share of good marketing. I'm not saying it is totally going to fail without marketing, just that together with good marketing it will surpass all others without a doubt!