If the payment was not originally made through PayPal then the merchant can not use the 'Issue Refund' link. The merchant can use the 'Send Money' tab to send you a payment with the intention of the payment being a refund. In order to do this the merchant would have to have a PayPal account already established so I would encourage you to contact them directly to see if they have an account and whether they are willing to do this. I wish you well and have a great day.
