1st Step: Cancel the invoice.
In the billing tab of the customer account, click on the invoice to be refunded.
To see the details of each invoice, click on the small arrow on the left of the invoice line.
Click on 'See the Invoice'.
Click on 'Cancel'.
2nd Step: Refund.
Choose a refund method:
Direct refund for all online payment methods
Refund on credit balance (they can use it to buy a new product)
Manual refund for all manual payment methods
Choose your refund method and then click on 'Refund'.
Once the refund made, you should see the following screen:
If you need more information in this topic don't hesitate to click here.