You must have "Full Access" or "Limited Access - Financials" permissions to refund invoices.
You can issue a refund for an invoice from Invoices or the Payout Report.
Refund via Invoices
From the left navigation menu, click Financials > Invoicing.
Find the invoice you'd like refunded and click the Sale ID.
Scroll to Activity and click on the Transaction ID.
Click Issue Refund.
Fill out the form and click Refund.
Refund via the Activity Report
From the left navigation menu, click Financials > Reports.
From the Activity tab, choose your "date range" and use the dropdown to select Invoices.
Click the Sale ID.
Click Issue Refund.
Fill out the form and click Refund.