That’s largely because the widely-reported 0.3% are the issuer’s takeaway, while the 3.5% are the (average? maximum?) cost to the merchant, so it’s not even an apples to apples comparison.

Out of the latter, three parties are paid: The issuer, the merchant acquirer, and the network.

Merchants pay significantly more than 0.3% to accept card payments even in Europe.

That said, US interchange rates (i.e. what the issuer gets) are much higher than 0.3%, which is why there’s credit card rewards.