Doesn't that mean people who don't engage in this 'hustle' are essentially losing money?
Credit card fees end up as a transaction tax on a huge part of the economy. The folks who have figured out how to insert themselves into the money flow (Visa et al.) are sucking a huge profit out by slightly taxing everyone else.
As a side benefit for the credit card companies, they also collect data about everyone’s purchases, and can earn extra money by selling that data to the highest bidder, compromising customer privacy.
The system is in need of some strict regulatory oversight, but card networks can afford expensive lobbying / campaign donations, so don’t hold your breath.
It's one of the larger rackets in the economy today, whole percentage points of consumer spending is syphoned by the financial industry as pure rent.
Essentially, card processing fees (paid by merchants), interest charges (paid by cardholders who carry a balance), and annual card fees (for some cards) are income to card issuers.
Points, cash back, and paying interest on purchases from cardholders who do not carry a balance are expenses to card issuers.
I expect income is rather static at scale. Which is why card issuers are always tweaking the expenses side. The numbers have to add up somehow, and if you go from all cardholders redeeming points for a real value of $100 to their doing so for a real value of $300... they won't.
Sign up bonuses (the easiest part of the hustle) are the hardest to gauge from the card issuer's side, as a hustler looks like a regular customer. There have been attempts by some issuers to track this in a more detailed way (e.g. Chase's 5/24), and I'd expect to see more issuers moving towards doing so. It's essentially the same problem Vegas has.
But remember, this is how credit cards work anyway. These companies rely on people not paying their bill in full each month, paying high rates of interest. That pays for all this "bonus" crap and more.