When a booking is made with the upfront approach the holder's card is charged immediately for the full booking amount. Bookings are “locked-in” meaning that users cannot cancel online.
Admins can cancel upfront bookings, however, it's important to note that cancelling an upfront booking does not issue a refund.
So, the first step is to create the refund in Stripe, please see the FAQ "How do I administer a refund?" for next steps.
Removing an Upfront Booking
Then, click on 'Manage booking':
Change the payment status from 'Paid' to 'Unpaid':
You'll then be able to remove the booking: