If the item had an attempted delivery the buyer will not receive a refund, but if you receive the item back, in my humble opinion it's morally correct to then refund your buyer you may need to do this via PayPal, a cheque or bank transfer.
If the item was not delivered at all, not attempts to deliver, ask your buyer to open a case for item not received. Under Simple Delivery rules, eBay refund the buyer, and you get to keep the payout.
@sameshop25