I'm here to ease your confusion between credit memo and refund, gracemadd.
We process refund if we reimburse our customers. We give the money back to them. While credit memo is used to offset the customer's balance. We can also apply it as a payment to the their future purchase. Creating a credit memo isn't considered as refund yet unless we applied it as a payment.
You can create a refund receipt to record the refund. Here's how to do it:
Go to the Plus icon and select Refund receipt.
Select the Customer and the affected bank account on the Refund From drop-down.