does that merchant end up having to pay(via chargebacl) for doing the transaction with the customer who had the bad gift card?
I think NO, if they keep paying for every chargebacks than they will end up being bankrupt. Once the card is used, i don't think merchants will be responsible for any chargebacks.
i am going to continue to do research on this.
i am scared to accept gift cards , i do not fully understand the charge-back policy in the case that the gift card turns out to be fraudulent.