> And often retailers pay more at POS terminals!

This is really the whole point. The sale of data is much less lucrative than the purchases by the customers themselves, especially for the "nicer" cards.

If you are a CC company with wealthy clientele, they tend to spend more. This means that retailers are willing to offer deals/rewards to attract those clients, and also that you want to offer rewards to keep those clients.

This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more.

Not saying you're wrong exactly, but https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car... does a good job of explaining the mechanics of rewards programs. It is more complicated/interesting than what you describe IMO.

Evil tracking is half of it, but the nominal "loyalty" benefit is there too. If I have a bunch of points with one company, I'm likely to accept a slightly worse deal from them relative to a competitor where I have none in the hope that I'll acquire enough for an award.

Non rewards credit cards also track purchases. It’s a revenue stream few companies are just going to leave sitting around.