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But if the tax is refunded to rewards recipients then it does not result in net higher prices for them.

Granted, some slice of it is kept by the issuers, but it turns out issuers mostly make money on interest not interchange.[1]

[1] https://www.valuepenguin.com/how-do-credit-card-companies-ma...

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The recipients need to think about were to shop, switch cards once in a while, all extra work to get 1% back of the 2% that the card issuers extract from the economy.

Meanwhile in Europe the issuers are capable of running a profitable business on only 0.3% fees (and much lower for debit). So even though you may think rewards programs are nice, they are in the end costing you more, not giving you free money.

If you're only getting back 1% to 2%, you're losing out on better cash back cards.

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