First of all, if you list something as an auction item with a starting price of £200, you should sell to any buyer who offers that price or above.
The buy it now price is not a minimum or a reserve price.
Either list an item as 'buy it now' or, if you want an auction, you must list the item at the lowest price you will accept.
You should refund the buyer.
Ebay will take the money from your funds and then pass the buyer's payment to you.
Do not send the item out - that will make things very complicated.
Use the link below to cancel your order.
You can cancel an order by selecting the button below. After you cancel we'll let the buyer know and, if they've already paid, they'll get a refund.
Cancel an order
"There are two ways to be fooled. One is to believe what isn't true; the other is to refuse to believe what is true.”
Søren Kierkegaard, Danish philosopher (1813 - 1855)