> The bank ate the loss for the fraud

Quite often, the merchant is unfortunately the one eating the fraud, which is creating a bit of a principal-agent problem (in that the issuing bank earns interchange on every transaction, so if they aren't liable for fraud, their default incentive would be to just approve as much as feasible and figure everything out later via chargebacks).

3DS changes that calculus quite a bit, though, and in-person payments are usually the issuing bank's liability as well.