For merchants who need the ability to create credit memos and track their use, you can now use the premium Loyalty Points Program for this purpose.
Setup is potentially done in two areas - Settings / Site Options / Customer Loyalty, and further in Customers / Types / Features, if you wish to refine by customer type, as follows:
In Settings / Site Options / Customer Loyalty, you will find the core setup elements that look like this:
In Customers / Types / Features, you will be able to set program specifics per customer type:
Note - To set and save specifics per customer type, first set your specifics and click "Finish" in the box for the settings. Then click Finish at the bottom of the Order Management System page to save your settings.
The storefront display for each use changes slightly. Here are the cart and invoice page messages for each:
The display on the customer's account page also changes with program use (loyalty vs credit memo):