From an engineering perspective, I don't think it's fair to say something CAN be a bad fit and yet a good choice? At least not without acknowledging it was the best choice available, and therefore not likely actually a bad fit?
In that scenario, it's literally the best possible fit.
That you don't have any viable better alternative at hand may be further evidence of that? (and I don't mean from a standards basis 'well, it's locked into financial rules now, so gov't intervention'). I mean, what else was going to work considering all the factors involved? What else could work better, considering the factors involved?
JavaCard is in fact so widely used and implemented (SIM cards, bank cards, health cards, passports, etc.) that it probably has literally 10's of billions of devices manufactured using it (3.5bln claimed as of 2010 - https://www.oracle.com/technical-resources/articles/javase/j...), in essentially every high value target rich environment niche you can think of, and at extremely low costs. Literally sub-cent per-item.
And with very high environmental stresses (like debit cards getting sat on, left in hot cars, run over, dropped in puddles, jammed into random dirty readers over and over again, etc.), those devices keep working.
And everyone from random countries gov'ts to random financial firms to telcos have managed to implement what they need in it without too much difficulty, and a minimum number of security issues. Which is frankly astonishing if you've ever dealt with folks like that.
So love or hate Java, or JavaCard from a stylistic perspective - any perceived complexity for implementing a Java VM in hardware has had no practical economic effect, or slowed down implementation meaningfully.
It's fit for purpose.
Probably also ugly and feels gross using them sometimes, but a lot of fit for purpose stuff is until you've experienced the alternatives. Hopefully you never have to fix a sewage lift station pump, or clear a clogged sewer line, or clean out a transmission after it's burned out.
Each of these has literally hundreds of years of specialized knowledge and expertise behind their often boring looking facades. They're all amazingly complex if you learn about them. And they're all better than throwing sewage in the street, or carrying everything on horseback. And they're beautiful in their own way when you appreciate why they are how they are.
Even if they're not shiny and flashy, there is beauty in them, because they work well.
And they're still amazing engineering marvels, necessary for our lives as we know them and based on the actual engineering principals involved and the problem domain.