2) giving a cut to some payment processor like PayPal? I'd rather use cash.
Cash is much more expensive than electronic money.
An example of this is the 50 euro bill here in Europe. In most ATMs, 50 euros is the biggest bill available. This means that the 50 euro bill is almost never used to give change back. Now think about the life cycle of a 50 euro bill.
First, it is printed, checked etc and sent guarded by big men with guns to banks, where they are put inside an ATM machine.
Then, a consumer takes it out a 50 euro bill in the ATM. He then goes to a shop and buys product A, gives the 50 euro bill, and receives change (which is of course smaller than 50 euros).
The 50 euro bill then stays in the cash register where it is accumulated with other 50 euro bills since no one pays with a bill higher than 50 euros, it can never be used as change.
After a long day of work, the shopkeeper then bring the bill back to the bank, where it is counted, bagged and sent back to the national bank guarded by big men with guns.
The national bank then checks that the bill is in good condition, bags it ans sent it back guarded by big men with guns to the bank where it is put in the ATM for the next consumer.
This whole process is hugely expensive.
So you may have the impression that you don't give a cut when using cash, but that's merely because the cost is subsidized elsewhere.