All refunds occur at your payment gateway, whether that be PayPal or a credit card gateway like Stripe. All payments are handled by the payment gateway, and thus is where refunds are processed. Once you have refunded an order through your payment gateway, no further action is required on SupaDupa itself - although you may want to cancel the order if it is yet to be fulfilled, and you may also want to add a note to the order on SupaDupa for your own records.
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Please see the support documentation for your particular payment gateway on how to process a refund.