IIRC credit card companies don't have that much of this kind of data. For the most part when you pay with a card, the transaction details (for example line-items) are not reported to the cc company or processor.
Credit card companies only know where you are shopping and how much you spend. This gives Amazon product level data.
Precisely. This is deep in the trenches data.
Amazon will gain by knowing what products sell most at what time of the week. It will allow predict where to roll out certain services. One day delivery? Done.
Also, I guess most of the merchants who sign up will be first-timers who accept cash before. Information from these people are what Amazon needs. Let's say in certain region there has been high sales of tea cups, I won't be surprised if one day Amazon starts suggesting its tea cup selections to buyers from that region, with free shipping and lower prices...