Scan the receipt to open the customer order.

If no receipt is present please follow these steps:
On the home screen of the Shopify POS app, tap ≡.

Tap Orders.

Tap the order of the item being returned.

Tap Return.

Edit the amount to refund and set to £0.00 - This will return the item back into your store, but will not issue a refund.
Open the Shopify App.
 
Search for the customer in the search bar (email address is usually the easiest method).
Select the customer and search for the first transaction before the enxchane took place.

Click on the order.
Click on the ••• icon on the top right.
Click Refund.
Under Refund Amount - Enter the total amount to be refunded onto the customers card.
Click Refund.
This will now issue a refund to the customers original payment method.