Those merchants likely have a special contract with the card issuer to be a partner with the card issuer. Travel brands lock in repeat brand-loyal customers with mileage rewards. Some of those cards have hundreds of dollars of yearly fees, and the cardholders are spending more overall to negate the impact of the fee. Even so with rotating cards it’s easy to end up in a place where you don’t get your money’s worth or just barely beat the fee. If your card gets you 5% rewards and costs $400 a year, and you come out of the year with $600 in rewards, you’re up $200 overall while the issuer got $400 from you and $300 out of a 2.5% merchant fee, so they’re still up $100. That’s all assuming every one of your purchases was a 5% reward purchase. The issuers margin goes up every time you use their “Shop With CardCo” shopping portal where merchants pay more money to advertise through, or take advantage of other partner deals.

The people churning enough to actually cost the issuer money are extremely rare and there are a lot of people making sure it stays that way.

And then there are folks who get hit with interest and late fees that subsidize the big churners.