When you pay a seller it is never instant, paypal credits the seller for you and then starts the process of uploading your funds from your funding source. If the seller refunds before that payment has completed then you have to wait till it clears through to paypal then the refund is credited to you. If the refund is done at a later date and the payment has processed then the seller can only refund via an echeque or funds in their paypal balance, if its the former then it takes up to a week to process through to paypal and then they credit you. This is because paypal use electronic and not wire transfers which is the slower, and why they credit the seller for you so you don't have to wait and get your item more quickly.
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