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If it was showing as 'intiated' and you had the cancel option then its the SELLERS mistake as they had an old or wrong email address on their auction.
Tell your seller to do this....
Go to ebay and click on 'sell' put in anything (as you aren't going to actually list anything) until you get to the main page > scroll down near the bottom and where it says payment methods check the email address that is on that page, is there a spelling mistake or old one?
However as regards your cancellation.............
If you were able to cancel a payment it means the seller made a mistake with the email address on their auction and could not accept your payment.
Luckily you could cancel, so when you cancel a payment those funds can't do a u-turn > they have to process through to paypal who will as the transaction was cancelled return them to your funding source (if you paid from your bank account or with a card), or credit your paypal balance (if it was funded from that balance), but that takes a few days and sometimes up to a week.