Did you have enough funds in your paypal account to cover the full amount fo the refund? I had a situation in which I refunded an amount higher than my paypal balance. What paypal does is request from your bank the full amount of the refund. Not just the difference between your paypal balance and what you are refunding, which is what i would have guessed they do. They request the full amount for the refund (minus the fees they initially charged you which they refund to you) but at the end you should be left with the balance you had in paypal at the time of the refund. I hope that makes sense. I'm not sure how it works when you refund and amount equal or smaller than your balance. In that case, based on what i understood from my chat with paypal, the amount is just taken out of your balance. No money comes out of your bank. The issue with this whole thing is that, apart from being confusing, it means you have to wait 3-5 biz days for the money to go from the bank to paypal. I hope this helps
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