Your buyer opens a case for the return.
If your payout is on hold , it will be if you are a new seller, then your back up source is used to make that refund, which is usally your bank account.
Once that is made, and case closed with a refund, money from hold is released to you.
Have you signed up fully and correctly with eBay's Managed Payments?
See here:
https://www.ebay.co.uk/help/help/selling/getting-paid/introducing-managed-payments-ebay?id=4795
@rob4-13
@rob4-13