I remember places doing this about 15 years ago and for some reason it disappeared, almost overnight. Now it seems to be a California phenomenon reaching out all over the rest of the country. Not really sure what's brought this back...
One thing I will say, all these "business people" want to throw a fit over accepting cards and then will complain they are losing business to Amazon. Well Amazon accepts credit cards without an issue. If you're not going to run your business right then you've got no right to complain when customers leave and don't come back.
I think part of the reason why it's more of an issue in larger cities, is because there are enough people who will go into a store for the first time along with some who will deal with it anyway, which makes it worthwhile enough. In a smaller town, discouraging customers doesn't end well for the business.