Some of it's paid for by the merchants https://www.investopedia.com/articles/personal-finance/040715/how-cashback-profitable-credit-card-companies.asp https://

Some of it's paid for by the merchants https://www.investopedia.com/articles/personal-finance/040715/how-cashback-profitable-credit-card-companies.asp https://www.investopedia.com/articles/personal-finance/04071... > When merchants accept payment via credit card, they are required to pay a percentage of the transaction amount as a fee to the credit card company. If the cardholder has a participating cash back rewards program, the credit card issuer simply shares some of the merchant fees with the consumer And some is paid by interest being paid by other customers http://www.bos.frb.org/economic/ppdp/2010/ppdp1003.pdf http://www.bos.frb.org/economic/ppdp/2010/ppdp1003.pdf > Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general. On average, and after accounting for rewards paid to households by banks, the lowest-income household ($20,000 or less annually) pays $21 and the highest-income household ($150,000 or more annually) receives $750 every year I also have a vague memory that some cards from the same issuer (mostly American Express) charge the merchants more for the higher-level cards, and prevent the merchant from treating those customers any differently. I can't find a source for that, but some starting points might be https://www.washingtonpost.com/business/economy/supreme-court-sides-with-amex-in-lawsuit-over-rules-for-merchants/2018/06/25/c6118978-7887-11e8-80be-6d32e182a3bc_story.html https://www.washingtonpost.com/business/economy/supreme-cour... and https://about.americanexpress.com/press-release/american-express-agrees-settle-class-action-litigations https://about.americanexpress.com/press-release/american-exp...