I am interested to know in detail how a bank profits from issuing
credit cards and what margin they achieve from each of the revenue
streams. I also need to understand why they call credit card business
a volume game

They grab a percentage on all transactions and they also get an
obscene amount of interest on credit taken by card holders plus
penalties from those who fail to meet their payment dates.

Their costs may include fraudulent transactions but wherever possible
they charge these back to the merchants.

Probono nailed most of the answer quite well:

1) A merchant who makes a sale to a customer who uses a credit card
usually has to pay approximately 2.5% of the sale to the credit card
company.

2) Credit card users who carry a balance on their card have to pay
interest typically ranging from 9% to 20%, but sometimes even ranging
over 30%.

3) If a credit card user fails to pay the minimum payment by the due
date, they must pay a late fee, typically around $29.

and I'll add:
4) Most credit card companies include several advertisements along
with the monthly bill, the advertisers pay for this.

5) Most credit card companies offer "special deals" to their customers
...  these range from umbrellas to jewelry to vacations.  These tend
to make them some money too.

It is very much a volume game because the credit card company's
expenses rise very little when they get a new customer, but their
revenue rises somewhat proportionally.  In economic terms, marginal
cost < marginal revenue for each additional customer (although not
every individual customer, but the average additional customer is what
they're concerned with dealing in volume).