Learn Spanish (Latin America): Incluso si el mercader paga, el bandido robará la mercancía. - Even if the merchant pays, the bandit will steal the merchandise.

This is a special rule for incluso si. Just like the word si (if), incluso si cannot be followed by the present subjunctive. To talk about a possible future condition, you must use the present indicative, which is paga here. If you used a concessive word like aunque, you would need the subjunctive: Aunque el mercader pague.

If I wanted to rewrite this using aun cuando (even if/even when), what would happen to the verb paga?

Because aun cuando is expressing a hypothetical future condition whose outcome is not yet a reality, it requires the present subjunctive. The sentence would become Aun cuando el mercader pague, el bandido robará la mercancía.

How would the sentence change if we wanted to express a highly unlikely scenario: Even if the merchant paid, the bandit would steal the merchandise?

To express an unlikely or contrary-to-fact scenario, incluso si behaves exactly like a normal si clause. You shift the condition to the past subjunctive and the result to the conditional: Incluso si el mercader pagara, el bandido robaría la mercancía.

Why use mercader instead of a more common word for a seller or merchant like comerciante?