You can usually cancel a PayPal payment that is in a "pending" or "unclaimed" status. These payments will have a status of “Unclaimed” and will show in the “Pending” section of your PayPal account.
This does not apply to an "order" you would like to cancel, you would need to contact the seller to discuss options for a cancellation and request a refund. Per your post, sounds like the merchant or seller will cancel the transaction for you, once that happens the funds will be returned however, it's not an instant process.
If the payment is completed, you won’t be able to cancel it. You’ll need to contact the recipient (or seller) and request a refund
To cancel a "pending" payment:
* On the Summary page, locate the pending payment
* Click Cancel under the pending payment.
* Click Cancel Payment.
Additional stuff to know:
* You can only cancel a pending payment that has a "Cancel" link next to it.
* If the payment you sent is pending for 30 days, it will be canceled automatically and refunded to you.
* If you sent the payment using a debit or credit card, the refund will be credited to the card you used. It may take up to 30 days for the card to be credited.
* If you sent your payment using a bank account and the payment is canceled, it will be refunded to your PayPal balance. If the payment has not cleared your bank yet, please allow 3-4 business days for the money to appear in your balance. Once the payment is in your balance you can withdraw the funds to your bank account.
* If you are unable to cancel the payment and need a refund, please contact the recipient of the payment.
* If the recipient doesn’t agree to refund your money, you may be able to open a dispute in the Resolution Center, where you'll be able to communicate directly with the recipient/seller and try to resolve any issues.
