A credit memo is a balance that carries over from the customer's last transaction, to be applied to future sales. Credit memos and refunds work to accomplish the same goal, which is to give your customer back funds that they've paid to you either by mistake, or that are now supposed to be returned to them. I'll help explain how these funds are dealt with in QuickBooks Online.
If you're going to be paying your customer these funds without having them applied to a future sale, I'd recommend issuing them a refund, rather than a credit memo. Here's more information about how to record a customer refund instead: Record a customer refund.
While you're able to record this movement of funds in your QuickBooks account, the actual money movement will have to occur outside the system. I recommend using e-transfer if you're trying to electronically deposit the money into your customer's account.
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