Merchant sent me money but paypal has it on hold. Why?

[Thomas378]

A merchant sent me a refund on paypal. My paypal account says my money is on hold. What gives paypal the right to put a hold on my money?

[kernowlass]

@Thomas378 

Pending refunds can only happen for two reasons.

1. The seller has issued a refund from their bank account which takes time to process.

2. You funded the payment to the seller using bank transfer. What PayPal do here is credit the recipient on your behalf (so there is no delay in despatching your item). Then if you receive a refund in the meantime they are unable to issue this until the original bank transfer completes.

https://www.paypal.com/cshelp/article/where-is-my-refund-help130

Paypal can't give you your refund until they receive it themselves to pass on.