If it shows up as refunded on your PayPal account, then it's possible that the refund is being sent straight to a debit/credit card. I would double check and see if the money has been paid directly into your bank account.
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Sounds like the receiving fee for a Goods and Services payment. That's the fee that would be taken on a payment for £220. Usually if a payment is sent via Friends and Family, the recepient doesn't get charged the fee
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If the person had the money on their PayPal balance before issuing the refund, then it should have arrived istantly. However, it sounds like the refund may be coming from their bank via echeque as they won't have had the money there, and these types of bank transfers take about 5-7 working days. It's possible it could arrive today; if not, you'd be looking at Monday or Tuesday at the very latest
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Are they receiving any particular on-screen error messages when they try this? Payments from America shouldn't be an issue, especially as PayPal is an American country
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Sounds like you may need to add Euros as a secondary currency on your balance manager. This should then prompt the website to automatically convert the payment into GBP and hit your available balance
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Were you asked to provide API credentials in order to link your account to your website? It sounds like a potential issue with this link. My recommendation would be to contact PayPal customer services and have them test your checkout flow on the website
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