Amen. Look, guy, lets try getting your headlights pointed a little farther down the road than where they are now, which is just in front of your feet. You are traveling in the dark and you won't find your way out until you get the headlights pointed ahead of where you are going.
How much time have you invested, including all the fretting and obsessing, into this transaction? And how much is your time worth? When you finish doing the math on those variables, I bet you come up with a dollar figure a lot larger than the $16 plus shipping you put out on this. Pay up and learn your lesson like the big boy we all know you can be. No one said everything in life is fair. There is a very old Chinese saying that in every disaster there is an opportunity. Said a little differently, this unfortunate turn of events is a learning experience.
1. Ship UPS and send your recipient the tracking number. First problem solved. Who the hell cares how many times you did not have problems shipping by US Snail Service? This is the only time that matters, and it did not work out well, did it? No, you cannot trace mail unless you either send it registered or by overnight express mail. I can't believe you would continue to use them if this problem occurred. By not having a way to trace your package you transfer all the control to the shipper. Once it leaves your hands, it is completely beyond your control. So doesn't it make sense to have proof in case something bad happens?
2. To answer your question, let us assume that this could affect your credit. Do you know your credit score and what is on your credit history that is affecting your score? Find out. If you do nothing and Paypal can report this, then you have to spend more of your valuable personal time in order to send a written explanation of why this debt was not paid. And I don't think they will like it if you simply tell them you did not want to give this guy a $16 fuse holder or that you have no proof the item got shipped to this guy but you know you shipped it.
3. So we are back to the original statement. Just pay up and move on. Lesson learned.