I have just been refunded for an item i bought off ebay because the seller says I would have to wait another month for delivery! The money hasn't appeared in my paypal balance which I thought it would; or will it be transferring the funds to my bank account instead?
Though I believe, if when you made the payment you sourced it from a debit or credit card and not from a Paypal balance, the refund goes from your Paypal account back to the source account. IE the whole transaction is reversed.
There must be different Paypal accounts. I looked back through my Paypal account and located the refund I recalled, and it did indeed refund back to the credit card that sourced it.