Comment by tzs

The credit card processor for that merchant took into account the mix of reward cards they historically see across all the merchants on the same plan and set that 3% based on that.

If everyone was using a reward card and they all had the same reward percentage you would be right that there is no redistribution.

But because most merchants charge the same price to every credit card user (and often also to cash users) there is a redistribution from those using lower rewards rate cards to those with higher rewards rate cards.