Paypal offers certain protections for buyers and sellers, including the chance to refund or reverse Paypal payments. For example, you might sell an item and accept payment, only to drop the item and break it before shipping. You'll need to reverse the payment and give the seller back her money since you can no longer offer what she paid for. Paypal makes it easy for users to reverse a payment.
Sign into your Paypal account. The only way to reverse Paypal payments is by refunding the payment directly to the buyer using the website.
Choose the "History" section at the top of the screen, and select the date of the transaction. If you're unsure of the exact date, Paypal lets you pick a period of time by naming two dates and showing all transactions that occurred between those dates.
Find the payment you need to reverse, then select the "Details" button next to the date of the transaction. The Details menu shows you all information relating to that transaction, such as the buyer's name, shipping address and any notes she sent to you about the sale. Write down the amount of the sale.
Select the "Refund Payment" button at the bottom of the screen. This takes you to another page and lets you reverse the payment. Type in the total amount you want to refund to the buyer using the information you wrote down earlier, and press submit.
Log out of your Paypal account and wait a few minutes before logging back into your account. The total amount should now be reversed back to the buyer, but you may need to wait a little longer to see the amount credited from your account.
Take these steps if someone accidentally sends money to your Paypal account. If a buyer writes down the wrong email address and sends his payment to the wrong account, you’ll need to refund the money.
If you’re a buyer and need to reverse payment to a seller, log into your account and look at the transaction. Select the details and choose the "Refund Payment" button. But this only works if the seller hasn’t yet claimed the money, which is shown by an Unclaimed icon. If the seller already claimed the item, you’ll need to formally dispute the charges.