In order to refund online through Magento, you must open an invoice, then click Credit Memo. An online refund can only be applied to a specific payment capture (which is an invoice). This is true for all payment methods.
So: Open your order, then go to Invoices and open the invoice, then click Credit Memo, and you should see buttons to 'Refund' or 'Refund Offline'.
If you click Credit Memo from an order, you will only see one option: 'Refund Offline'.
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