When we lived in the States we basically did every money transaction with a credit card, debit card, online transfer or check. I rarely carried cash at all and had no reason to because virtually every business was set up to accept payments in these ways. Here, unless you are shopping at a major chain like Costco, Home Depot or large grocery store these payment methods are not usually accepted. But, having "cash" is not the solution to all things. If you have the "wrong cash" you probably won't be able to function very well either. ATM machines love to spit out 500 peso bills(about $38 US) so that is what many people, especially visitors, have in their pockets to spend. Most small business, though happy to have your business, hate to see these kind of bills come in to the store for payment unless it is within a few pesos of the actual charge.
Taco stands, beach vendors, small grocery and retail stores etc will most likely not have change for large bills like $500 peso bills or even $200 peso bills. Most of these operations are small time and just don't carry a large bank to make change. If they do, they might be cleaned out as far as making change goes for the day. This inability to make change can effect a lot of things you do like eat, shop and buy groceries. Certain places will be able to handle a larger peso bill and you might have to go elsewhere if they can't. Yes, we have made spending decisions based only on whether or not the business would accept a 200 or 500 peso bill. Usually businesses will make every effort to go down the street to another store or find another vendor who may have change for a larger bill. I will always ask before I sit down or try to buy something just to be sure they'll take it. So, if you are out about town I would suggest having a good supply of smaller bills and coins in your pocket rather than just a few large bills. It will make everyone you buy from very happy to see you.
