IIRC, the merchant gets paid if hitting a credit limit or similar decline reason. The card holder then gets hit with a financial penalty (usurious interest rates, or extra charges). If the card has been stolen, it ends up in a big phonebook-like book for offline use (otherwise the merchant just called it in for big purchases).

If you mean chargebacks: I believe imprinters had card issuer liability for the longest time, at least as long as the transaction was under the (network-defined) "floor limit".

So if these were relatively low value transactions, the bank would simply not have any standing to decline payment.