I will show how to refund back to client in Paypal Sandbox. It is the same process as live paypal site.

Before you can refund back. You need to go through the following articles so that you have records of customer purchases that you could use to refund back.

How to create paypal buy now button - part 1.

How to create paypal buy now button - part 2.

Once you have few samples of customer purchases, then if you want to refund just follow the steps below.

Please login to Paypal SandBox using your username and password.

Then click Test Accounts to access your Seller Account, which customers have bought items from the seller. Click Enter SandBox Test Site.

Enter your username and password to access the seller account and Click Log In.

If your customers purchase record is there , then Click Details to access the record. If it not there, then you need to search.

You will have the transaction details of the purchase. Please scroll below.

Please note you can issue a refund for up to 60 days after the original payment was sent. PayPal refunds the payment and fees, including partial fees for partial refunds.

To Issue Refund, Click Issue Refund link below the page.

Enter the amount you want refund, enter a note to the buyer (optional) and Click Continue.

Review the amount and the details. If confirm then Click Issue Refund.

Refund Complete and your refund has been sent. An email with refund details has also been sent to the recipient.

Then you could View the refund, View the original transaction Or Go to My Account.

That is all on how to refund back your buyer.

Other Details Below !

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Email Notification Sent to The Buyer

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Your buyer will get an email about the refund. Sample of the email as stated below.

From: service@paypal.com
To: arazak_1251711671_per@gmail.com
Date: Oct. 28, 2009 21:19:47 PDT
Subject: Payment refund from PRO BYTE's Test Store

Oct 28, 2009 21:19:47 PDT | Transaction ID: 9YJ27338EG470090R

Hello Test User,

You received a full or partial refund of $20.00 USD from PRO BYTE's Test Store. The refund will go to your PayPal account.

To see all the transaction details, please log into your PayPal account. It may take a few moments for this transaction to appear in your account.

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Merchant information:
PRO BYTE's Test Store
proby_1256705730_biz@gmail.com
http://www.helloworld.com
408-908-2569

Note from merchant:

None provided

Original transaction details

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Payment details

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Description: Buy Now Button Testing,
Unit price: $50.00 USD
Quantity: 1
Amount: $50.00 USD

Tax: $2.50 USD
Shipping: $5.00 USD
Insurance: N/A

Total: $57.50 USD

Questions? Visit the Help Center at: www.paypal.com/help.

Thanks for using PayPal – the safer, easier way to pay and get paid online.

Please do not reply to this email. This mailbox is not monitored and you will not receive a response.

PayPal Email ID PP1465

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How is my fee refund calculated?

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If you issue a full refund, PayPal will refund all the fees. If you issue a partial payment refund, the fee refund will be calculated at the same percentage as the payment refund.

For example:

Your customer buys $100.00 USD of merchandise from you. The fees for this transaction total $3.25 USD ($2.90 USD of this is variable, $0.35 USD is the fixed transaction fee, which is not refunded for partial payment refunds).

You issue a partial refund on the transaction for $40.00 USD (40% of the original amount).

PayPal issues a refund of 40% of the total fees, which in this case would be $1.16 USD (40% of the variable portion of the fee).