You say "only" as if this isn't the majority of the american bourgeoisie.

Pretty much all of finance, Landlords, IP trolling - the rich will unashamedly collect undeserved rent on anything they can up to and slightly over the line of the law.

It's a prisoner's dilemma. If we collectively switched to a payment system with lower transaction costs, we would all be better off. But as an individual, it is in your best interest to use the credit card with the highest rewards program, because you have to pay that extra 3% either way.

On the one hand, 3% cc fees are much higher than what would be set by a competitive market and are only possible with an oligopoly. On the other hand, the convenience that they allow for not carrying cash is often worth more than the 3% to consumers/merchants like me. E.g. any online payment. So while it's massively overpriced, it's still a win win usually, and I think that's probably why people aren't madder about it.

What prevents a new credit card company coming in and competing with a 2% transaction fee and undercutting visa/square?

Is it barrier to entry? Or would such hypothesized credit card company eventually cave to greed once they got big enough and move to 3% fees?