Cash has a load of fees of its own though - loss, theft, peoople giving wrong change out, transport costs (and the risk it entails), bank fees to accept etc. I believe the cost of handling cash is estimated at 1-2%. I know my business bank accounts all charge 0.5%-1% to pay cash in.

The only way it makes sense is if you are evading tax, as you'll happily pay 1-2% in cash losses to save 20, 30, 40%+ in taxes.