"apple pay merchant identification" Ios 13

https://support.apple.com/en-us/HT207056

"Apple Pay Merchant Identification: Your iPhone will use your current location to help provide more accurate merchant names when you use your physical Apple Card."

Basically, it seems that this will allow Apple to use your current location to try to GPS-guess the business you are paying to at the moment.

I just turned this off because of several instances where Apple Pay completely got the merchant wrong when I used my (physical) Apple Card, apparently based on location. For example, using it at a parking lot got tagged as being a charge from a nearby dentist... I’ll see what happens now.

I agree with klitchev's interpretation. It has the added feature of verifying that it is you using the payment method, not someone thousands of miles away who stole your credit card number.