Paypal have recently made a change to how part-refunds work. If your Paypal account balance is less than the *entire payment* you’re trying to refund, you will not be able to process the refund – even if the amount you want to refund *is* less than your Paypal balance.
Just to clarify things, here’s a scenario: you receive a payment for Â£200, which you withdraw to your bank account. The customer wishes to return half their order, so you need to refund Â£100. However, because you regularly empty your Paypal account, your balance is only Â£120. You will *not* be able to process this refund. Your customer will have to wait until you have a balance over Â£200 before you are able to process the part-refund. Doesn’t look good, does it?
If you’re running a business, therefore, you need to keep a reasonable balance in your Paypal account to cover situations like these.