I offered cash at a jewelry store once and they refused. I thought they'd certainly want to save ~3% of an expensive bill. But when I asked why, the answer made some sense. Basically, the owner did not want to deal with the security headache of handling a lot of cash, specifically transporting it to the bank. So that was worth the 3% or so haircut they end up paying to the credit card companies.
Cash is important though. Fungible, anonymous currency is important to keep. The best way to keep it is to do exactly what you did in this situation. You don't take the "real" version of money, I'll go somewhere else. In my case with that jewelry store, I could have refused to buy at that point, but there unfortunately wasn't an alternative.