Depending on the industry sector, cash can effectively be several times more expensive to handle than the US market interchange fees. I don’t think it’s obviously horrible for merchants.
There are definitely lots of merchants who don't take (or strongly discourage) cash— think Apple Store, IKEA, the self-serve tills at the grocery store, anything online. But the common element in all of those is that they're big companies who can negotiate better rates.
Independent retailers, restaurants, etc are put in an awkward position where not accepting credit cards can cost them business, but accepting them forces raising prices which can also cost them business.
Canada has an interesting option in the form of our Interac system for debit, which has more favourable fees especially for small purchases. Since every Canadian with a bank account has an Interac card, one common option for indies is to accept only cash and debit.
> Since every Canadian with a bank account has an Interac card, one common option for indies is to accept only cash and debit.
Except I hate using my Interac card for... well, anything... because if it gets compromised, it's my own chequing account that gets locked with the missing money.
Visa interchange fees for the higher end rewards cards top 2.5% of the transaction. That's cost that the merchant has to pass on to the consumer in the form of higher prices.
The EU caps it at 0.3%, and the banks still manage to stay in business.
Till theft, the physical act of counting it and securely storing it, screening counterfeits, securely transporting it to the bank, etc. I don’t have direct links handy, but there have been some good insightful comments on the topic on this site previously. Hopefully they will turn up without much difficulty with a search. Sorry to have to pass the buck on a more detailed answer.
Handling cash is very labor intensive, you're paying your highest paid employees (managers) to count cash multiple times before/after shifts, bank runs to deposit, making change, rolling coins, etc. Plus the cost of physical security for that cash.
If you handle enough of it, you probably wind up contracting with an armored car company to come collect it. Some gets lost or stolen, coins have to be rolled up for deposit, etc.
