The existence of a dispute resolution system is usually enough to keep the vast majority of participants in a system honest.

In the case of card payments, merchants incur a fee for every transaction reversed through the card scheme, whereas voluntary refunds are essentially free. They are accordingly incentivized to understand and follow the scheme rules.

> And the one time I had a dispute, Visa claimed that the transaction was out of policy somehow (timeframe, region, etc)

That's unfortunate, and mistakes or seemingly unfair decisions do happen – just like in a public legal system. But you are essentially basing your opinion on a sample size of one.

Practically, some banks just seem to be better (i.e. more consumer friendly) at dispute resolution than others. As an example, in the case of a high profile airline bankruptcy in my country, some banks have proactively reached out to their customers, letting them know they're happy to pursue disputes for them, while others were declining them outright due to a – likely wrong – understanding of scheme rules and bankruptcy law.

Yeah, basically everything you've said is the details of what I meant. Why is this often overlooked? Why is it taken at face value that a central clearinghouse (or similar) is bad??