Once a customer has accrued enough loyalty points, they are able to redeem them for products in the sell screen.
Once you've added the products to the sell screen and attached the customer to the sale, open the complete sale dialog by clicking on the Finalise button in the bottom right hand corner.
In this dialog you'll be able to see the customer's current amount of loyalty points and the value of them for this sale.
Type the amount of loyalty the customer wishes to spend into the input box or if they want to use all of their loyalty you can click on the Loyalty button. Once selected, the loyalty value gets added as a payment to the sale.
If there is an outstanding amount, the remainder will be required to pay on another payment method.
Note: Customer's don't receive loyalty on the amount of loyalty paid on the sale (e.g. if they pay half using loyalty and half using cash, only the half paid using cash increases loyalty to the customer).