> discover card gives you 1% BACK!

Yeah, the fees credit cards charge merchants (in part, to fund reward programs) is why Google has to charge you money to transfer funds into Wallet from other credit cards (otherwise, they'd be losing money when your money goes from a CC into Wallet and out to pay for something.)

Note that there is no fee when the source is not a credit card.

Because Discover makes far more than that on people who owe them credit and don't pay it off immediately, so it's in their interest to get more people to owe them credit in hopes that they'll keep a running balance.

Credit cards charge merchants for their loyalty programs. They do make money from carried balances, but that's not how reward programs are funded.

Regardless, the point is that credit cards make money off of each transaction, even if the consumer doesn't see a per-transaction fee.