[encoderer]

Debit-card only is something you'd need to determine yourself. But any merchant account API lets you issue refunds in this way. I've used Cybersource for it myself.

And of course, has anybody verified w/ Square that it MUST be a debit card. It could also just be a marketing distinction. For me, I NEVER use a debit card -- i abhor them -- and put everything on a credit card. So I wonder if it would let me provide a credit card number. For a friend sending me $20, it's no difference to me whether it goes directly to my Amex or makes a brief stop in in my bank account first.

[andrewpi]

Another reason they probably have the debit card restriction is due to the fact that the fees on debit card transactions are much cheaper than credit card processing fees.

[encoderer]

I thought that was only true when processed over the debit network? That is, when using pin transacations. In my experience debit cards processed over Visa or MC network have identical fees to the merchant.

On the money-sender side, debit cards have far fewer consumer protections so will result in fewer successful chargebacks. Whether that had anything to do with it, I have no idea.