A carder can install at any one of your merchants a card swiper and pin pad (presumably without the merchant's knowledge). So the carder will eventually have all the information that the customer has ... card #, expiration and PIN. The carder then creates a magstripe card with that same info and goes shopping at other OpenPay merchants.
What is the protection then from the carder that does this?
Isn't this a risk faced by all types of magnetic cards now?
Yeah, except that it isn't as much of a risk because credit cards are reversible. Now that there is more risk because of the irreversibility of Bitcoin, this solution is a little less attractive.
No mater what payment method you choose, carders are a risk. You can't stop every criminal out there all you can do is make it horribly unattractive for them.
As for reversibility being some sort of protection; in the EU if a transaction is made with a compromised PIN & card the law says it's up to you to prove that you didn't make the transaction, the bank is under no obligation to refund you if you can't prove it was stolen, they may do so as a courtesy but it really is bank policy that dictates this, not network policy.
In the US if you try to dispute a PIN based transaction the bank will generally laugh at you, my bank doesn't allow reversals on PIN based debit transactions at all. If yours does you're very lucky. I can't speak for all of them, but I know that of the major banks I've done business with in the past few years, none would reverse PIN debits for any reason even with a police report and newspaper article in hand. The most they would do is re-issue the card.
You can't have it both ways. You can't have the irreversibility of bitcoin and the reversibility of Visa, at some point you're going to have to say... Alright this is secure enough for me.
In furtherance of security, the solution includes several safe-guards to make it unattractive to carders & script kiddies.
A 1 time use disposable key generated on the fly to protect your primary wallet.
A tiered set of spending limits (you set) tied to static PINs which you also set.
Multi-factor auth or 1 time use disposable PIN via SMS
Network replay attacks are pointless because the key is disposed of by the client as soon as the request is received.
Brute-force attacks have a significant financial cost.
If someone had the static portion of the key (a carder for instance), the most they could get at is whatever you set your spending limit to for that PIN, for that day, for a single transaction etc.
If a carder were to try a non-pin transaction it would trigger an SMS to you, and it's doubtful they would have both your card and your phone.
Additionally the carder would have to know that $ome_random_card was actually used on the OpenPay network and not visa/mc or instore credit. That would require not just a pin pad compromise but a wholly compromised back office.
And if you're really paranoid about the threat of carders, just enroll different card(s) for different merchants and days of the week, a different one each day