Does a business with the ability to accept payment via debit card also have the ability to make a refund to the card? ?

Then take the dispute to your bank.  They can refund, they just don't know how.

They ought to, yes.

They should have the ability to refund on the card, unless it was charged using that little square card accepter thing. I would tell them to give me cash, if they can't refund on the card. If refund is due it doesn't mean you don't get your refund simply because they are illiterate and don't know how to issue a refund to your card.

Usually that's correct, but things may be a bit wonky due to COVID.

If customer service reps are working from home, they may not have access to credit card processing technology that they would have if they were in the office. 

The answer you got from Success is incorrect.   There is zero legal requirement for the business to provide your refund to your debit card.  It's perfectly legal for them to send you a check.    Heck, the Costco I order business supplies from regularly issues refunds on Visa gift cards (such as if I order and pay for something that is out of stock).

Yes, but said merchant may not know how to process the refund.

Yes.  They 100% have the ability to make a refund to that card.

If they will not then you call the number on the back of that card and dispute the transaction and report the merchant.

You can even tell the merchant that is what you are going to do, and you can bring your cell phone with you and call from that store in front of him while his mouth is trying to make words.