Most likely because a lot of their business relies on easily being able to provide a ton of people with free card readers. I'm sure they've explored a more robust option, but it's probably nowhere near as cheap as the current model.
Maybe a paid upgrade card reader is the next step, but if their goal is broad, cheap and easy distribution they'll probably be shipping with this model for a long time.
I'm not suggesting this is free, by any means. However, given the cost of buying existing POS hardware solutions, I'm confident I could handcraft bespoke ipad cases with card readers, sell them an ipad and still make a profit, all while undercutting a more traditional setup.
Agreed with the paid upgrade. Businesses are ready to pay for such things, especially when they bought a $500 iPad just for the purpose... what's $15 on a card reader? As was suggested, a cheap and free reader as well as a paid upgrade would work well I think.
Maybe a paid upgrade card reader is the next step, but if their goal is broad, cheap and easy distribution they'll probably be shipping with this model for a long time.