We can define the type of payment for a booking as below. But could you refine this some more so we can set the payment type differently for Balance and Security Deposit?
I would like to have a guest pay by transfer for the rental but only allow them to see the credit card option for a security deposit hold.
The radio options shown in your screenshot only apply to booking payments.
Security deposits only support Credit Cards, since only credit cards provide the necessary level of automation for automatic hold/release and charge/refund.