I believe this whole thing is designed to promote adoption of Apple Pay. Apple already gets a kickback on all Apple Pay purchases, so they don't even need to get any kickback on physical card purchases when the higher rewards for Apple Pay means card owners will push for better Apple Pay support.

Previously with other cards, using Apple Pay is just a matter of convenience for the customer. With the Apple Card, it's a matter of getting more cash back, so consumers are now financially motivated to prefer vendors that support Apple Pay.