If you want to draw this conclusion you’d have to calculate the cost of the alternative. What would the impact on prices be if there were no electronic payments? What would the impact on prices be if every bank had to implement its own electronic payment system with every merchant? The credit card system integrates a huge portion of the worlds merchants with nearly all of the worlds banks. It’s massively more efficient than the alternatives, apart from other conceptually similar systems that have exactly the same type of costs. Your claim that removing this efficiency would lower prices seems entirely implausible and to me.
Also note that interchange is capped in the EU at 30bps, and they seem to do just fine without 2% cashback on every purchase. One might start to think that we can do with something similar here in the US.
The TNG cash back program: https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-...
The TNG loyalty program: https://www.touchngo.com.my/promotion/redeem-your-points/
The TNG cardholder fees: https://www.touchngo.com.my/policies/touch-n-go-card-fees-an...
There’s also merchant fees (which are confidential). All of these systems are just reinvented credit cards. They often try to compete with credit cards on merchant fees, but you’re still paying for exactly the same thing. This “alternative” is just the same thing with a different name. You might find a few base points difference in merchant fees here and there (especially during the growth phase of these technologies), but the alternative isn’t to eliminate the premium charged for processing credit cards, it’s simply to allocate it to a different service provider.
Merchants are charged 0.5%. Compared to 2-3% in the US credit card scheme.
The alternative is credit or debit cards with a tenth of the fees and no cashback, just like in every other country.
According to the local gas station, 10 cents cheaper per gallon. Which is about 2%.
You can pay a very similar flat 1/3 of a cent fee for an instant FedNow payment with none of those risks or costs.
0.3c is still far in excess of 0.0025c but maybe that won't matter.
[1] - https://www.thebalancemoney.com/credit-card-surcharges-31542...
TLDR: The existence of credit cards is basically an automatic 2-3% inflation on prices. As a fraction of income, this hurts the poor the worst. The better off get this 2% back as rewards. Cash payers get nothing back.