Welcome to the world of selling items on eBay. Doesn't matter what you say in a listing. Unless you state some sort of policy in your listing, if a buyer wants to return the card, you have to send him a refund.
Once you have the card back in your possession, before sending off your refund go to eBay's resolution site. Say that you want to cancel the item because the buyer is returning the item. Then send off an email to your buyer and tell him that once he responds to eBays request to cancel the transaction, you will send him a refund. Once he does that you will be notified by eBay. By doing this, you will get back the eBay fees for that transaction.
As far as refunding his S/H fees, that will be something you need to state in your listings before you list
Not worth hurting your feedback. Best just to refund his money. You might do better the second time around.
Good Luck.
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