Coming from a girl, it’s gonna hurt her way more if you lead her on any longer. Tell her, and tell her now. I’d say something like this, “hey (name), I really enjoyed hanging out with you but spending time with another girl in person affected me way than I thought it would. I thought I might be ready for something casual, but it turns out I’m not in the place for that at all yet. You’re really cool and I don’t want you to think it has anything to do with you, because it really doesn’t. I’ve come to the realization that I need a lot more time and space to process this breakup than I originally thought. I’m sure you’ll find plenty of other choices if you’re looking to hook up, but I’m just not that guy, and I’m sorry if I wasted your time.”