I’d never come across that before, but quickly looking at the statement from Apple it seems like this only applies to browser and in-app purchases, not contactless transactions where you’re using your phone in lieu of a physical card:

"For cards with certain enhanced fraud prevention, when you attempt an online or in-app transaction, your device will evaluate information about your Apple ID, device, and location (if you have enabled Location Services), to develop fraud prevention assessments, which are used by Apple to identify and prevent fraud."