If you read the whole article, you would learn that it is actually coming from you, via the merchant. Which means you are likely paying higher prices. Now you pay the higher prices either way for the most part, so you may as well enjoy the kickback^W rewards.
When you're providing a service to one group at or below cost and making all your profits off another group or another service, that's the definition of a cross-subsidy, even if you do get a token amount of revenue off the first group.
I don't have to run the numbers, because I read the article where they did the actual research with real numbers, not your back of the envelope estimating, and they came to the opposite conclusion:
| This leads to our second hypothesis: High interest rates are necessary to recoup the high cost of rewards. However, our analysis shows this is not the case. Rewards expenses are more than fully covered by banks’ interchange income—fees collected from merchants based on purchase volume. On average, interchange income amounts to 1.82 percent of purchase volume, while rewards expenses are 1.57 percent.