How do I approve a partial refund after a dispute?

Buyer did a dispute. We agreed she would send the item back and I would issue a partial refund. My account says that “The refund will be held in your account until …. returns the item and you approve the refund”. But I don’t see any place to approve the refund. How do I do this? The Issue a Refund option doesn’t show up on the transaction and I have no idea how to do it. I’ve never had to do a refund before.

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