A refund I issued unexpectedly took excessive funds from my bank account - what did I do wrong?

[cndg]

My customer sent 2000 GBP by mistake (they meant 20 GBP).  My PayPal Premier business account is in USD, and has $5000 USD balance in it.

I refunded that payment.

PayPal took AUD (in the equivalent amount of 2066 GBP) from my bank, instead of simply reversing the customers credit card payment and deducting the relevant amount form my balance.

Did I do something wrong?  How do I prevent this ever happening again?  Is there a way to "un-do" this? (the payment was just taken from my bank now, but has not yet arrived at paypal for the refund to be completed).

Is it possible to prevent PayPal from taking funds from my bank without my express prior consent, without jeopardizing my paypal account and my existing customer subscriptions ?

[cndg]

OK - So I got onto the friendly support staff (after an hour on hold...)

The problem is that the payment was in GBP, and because of some EU or similar rules of some kind, they're not allowed to simply reverse the card payment, so they had to send money back.

The problem was that my account did not have any GBP balance, only USD - and it seems their system is programmed to extract refunds from our bank accounts in that situation, rather than using the PayPal balance (how or why is irrelevant - that's what they do, and we're stuck with it).

The good news is that apparently, on the very last web page before they do this, there is a warning that they're about to fund the refund from your bank.  If you see that: stop and work some other resolution out with your customer, or risk paying a fee equivalent to about 10% of the payment value (there's fees and about 4 levels of currency transfer commissions eating into you here - for me, the money went GBP -> USD -> AUD -> USD -> GBP and on top of the 72 GBP fee)

So - bottom line - it was my fault for not paying close enough attention to that fine print.