I don't believe that's accurate, cash-banks are inter-bank processes, and I know several vendors who do actually see a reduction in their bank account when a cash-back occurs.

Yes, if the recieving bank won't honour a cash-back then it will come out of card processing fees, but that's more like insurance than anything else. I wouldn't say that insurance is without worth.

Also, BitCoin has transaction fees. Except rather than being used for insurance, they provide a (very poor) profit motive for miners to continue keeping the network hashing rate high. The reason it's clearly a poor profit motive is that the popular markets around BitCoin are secondary markets (selling graphics cards rather than doing the mining yourself).