How do I issue a refund to a buyer who has already paid?

I contaced my buyer who has already paid, told her that I had found a small fault in the item which I wasn't aware of

earlier, asked her if she stil wanted it, at a reduced price. She said no, she would rather have a refund.

Now I am a bit lost as to how I proceed with this?

 

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Go to the resoliution centre in Paypal and find the option to refund, you just select to refund the full amount. You can as the buyer if they will agree to a mutual cancellation and if they say they will send the request through ebay. The buyer does not have to agree and many will taske the position that you deserve to lose the fvf for wasting their time.