In order to mark an order as canceled go to the Orders page in your admin account. Locate the order and click to view it. Then click the "Cancel Order" button near the top center of the page. If the order has already been marked as shipped you'll first need to reopen it by clicking the "Reopen Order" button near the top center of the page before you can cancel it.
Note that marking an order as canceled will not refund the payment to your customer. The only way to refund an order is to issue a refund through PayPal or Stripe, depending on how the customer paid.
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