In the case of a cancelled or unfulfilled order, you will need to Void the customer's order as well as do the refund through PayPal.
Partial Refunds are also possible via the steps mentioned below.
To conduct a refund in PayPal:
1. Sign into your PayPal account.
2. Click on the transaction of which you would like to do the refund.
3. Click Issue a refund.
4. Enter the amount you would like to refund and click Continue.
*When you refund the full amount to the Customer, the customer will get the full amount. However, PayPal will charge the fixed transaction fees (i.e. $0.50 for Singapore) to you. (https://www.paypal.com/selfhelp/article/FAQ1252/4)