Do any of you limit your transaction types on HSAs?

Apparently our HSA product that only permits the holder to access funds via debit card. No checks may be ordered, for example. When someone inquired about making cash withdrawals, as self-reimbursement for qualified, eligible HSA expenses paid out of pocket, the customer was referred to the debit card feature, and told to use it when making a purchase. In other words, they were denied access to their own HSA funds.

I think I know the reason for this excessive level of restrictions: I imagine it is paternalistically intended to help our customers not spend money on ineligible purchases. But as far as the IRS rules on HSAs go, there would be no problem with a customer simply withdrawing money - such as in cash - in any amount - as reimbursement for an expense already paid on a credit card or paid with cash or by check from another account. Also, we're just the bank in this situation - it is not up to us to confirm, or verify, how HSA funds are being used, much less for us to refuse to allow a customer to do something like write a check, or make a cash withdrawal, or use the account to pay a medical bill online. I think a "debit cards only" approach is absurdly restrictive and will ultimately cost us customers.

Is it common, that banks actually tell their customers they can't access their HSA funds except by swiping a debit card at a qualified merchant?

I am sort of surprised you have been able to sell this product or retained any customers. As you said, you have no dog in the hunt to control expenditures.

Thanks, I agree. Our numbers on this product are very small, probably. I believe this may have gotten started as a misinterpretation of the rules about FSAs. Third party benefit administrators explain benefits like medical insurance, FSA, and HSA options to HR, and then the next thing you know, years have gone by since HSAs were created, and we're now in 2021 and still treating HSAs like they were some kind of FSA card product.

We use a 3rd party HSA. Our prior HSA had checks and debit cards; our new one has debit cards that can only be used as credit cards (no PIN). If we have an expense that we need to be reimbursed we have to go HSA app/website and request the reimbursement through there (can be check or credit to specified bank account)