On the other hand, handling cash isn't without a cost either. Your insurance will be affected by how mush cash you have on the premises, and you need to pay someone (staff, Securicor, whatever) to take it to the bank. At which point any fake coins will get removed from your total. The reason that supermarkets started offering "free cashback" was because it was a convenient way to get cash off their premises and reduce their costs.
Yes, credit and debit cards come at a cost to merchants, but they do also bring monetary benefits. Fees, even for small shops, aren't that high these days (unless you just walk into your local bank branch and take whatever they offer you).