Whatever the argument - this new seller will not be around for long.

A bidder can bid and the seller has no idea how they intend to pay until the item is won.

If the buyer pays via paypal, the seller MUST accept this and send the item, so if this newby seller refunds the buyer and cancels the sale then I imagine they are going to end up with one hell of a lot of BIG BOLD RED dots from any buyer unlucky enough to deal with them.

Old story, if you can't stand the heat, stay out of the kitchen - eBay and paypal protocol will trump ANY so called terms a seller chooses to add to the listing.