I can not tell you how many times a year we have customers ask about cash discounts like it is doing us a favoer.  IMHO, the only reason to offer a cash discount is if you are not reporting the income.  If you are reporting all your cash income like you do with check and card then cash becomes a downside since it costs money to handle cash.  Most people do not realize it, but most business banking accounts have fees for depositing cash over certain limits for the month (i.e. 2-5000.)  For some banks it is a flat fee after exceeding the free deposity limit while others charge a percentage of the deposit.  Gving 0.25% to the bank to deposit cash when you can cash a check for free makes cash more expensive.

Additionally, with cash you must take it to the bank to deposit it, with checks you can mobile deposit it.  Now when you transport the cash to the bank it takes time and money to do so.  Now say you deposit $10,000 in cash at the bank, it takes an hour of your or an employees time and you your business charges $150/hr (typical rate for businesses) it just cost you 1.5% in labor to accept cash, now add fuel and vehicle expenses to drive cash to the bank and you can easily ad another $50 in rural location so there goes another 0.50%.  With bank fees, labor and mileage 2.25% is not unrealistic, but that much cash often accumulates over a period of time which means you paid interest (real or lost opportunity) and that can easily run another 1/2-1% or you need to deposity more often which increases labor and mileage percentages.  Run the numbers and the 2.6% card fees look pretty good after a short while.