Carrying out Digital Payments in Sales (1Z1)

Financial Operations:

With Accounts Receivable, you manage open receivables invoices that are automatically created from sales processes. Several analytical tools are available to monitor the receivables, allowing you to react quickly if you discover a declining payment discipline among your customers. You can easily create dunning letters for overdue positions and follow the dunning history of your customers.

Receivables Management covers automation with the following various aspects:

• The entire order to cash process benefits from automated processes, such as automated dispute processing
• Embedded analytical apps allow easy access to relevant key figures across the entire process chain
• Additional cloud-based SCP extensions allow to flexibly react to changed business needs and quickly scale up or down according to the individual needs

The digital economy is putting pressure on finance departments around the globe. Enterprises have realized that finance transformation will help drive innovation and manage this volatility.

SAP digital payments add-on is a cloud service that allows companies to process incoming credit card and other real-time payment methods in a secure and efficient way. This helps to significantly reduce cash reconciliation efforts for all companies running any variant of SAP order/sale-to-cash processes (B2B, B2C, POS, web shops, and so on) who need to offer their customers flexibility and access to multiple digital payment methods.

Why should your company invest in integrating digital payment methods with SAP digital payments?

• Automation - Spend less time doing the manual reconciliation regarding digital payment methods and make use of automated splitting and posting of fees and taxes.
• Compliance - Keep sensitive payment method data out of your system with the tokenization approach.
• Integration - SAP digital payments is aligned with SAP roadmaps and integrated into your business process flows.
• Reduce TCO - It is future-proof. As new methods mature, SAP will integrate them. As formats change, SAP will do the operational updates. This is a SaaS product with no additional hardware, maintenance, or operations costs.

The main process flows covered by the Digital Payment - Sales process can be described as follows.

Using credit card data maintained in business partner in sales document:

• Add and register credit card data in Business Partner
• Assign customer payment guarantee procedure
• Check credit card data in sales documents
• Release sales documents with payment card
• Proceed with all succeeding steps of related scope items (such as BD9) until billing document is created
• Check credit card data in billing document

Using one-time credit card data in sales document:

• Check credit card data in sales documents
• Release sales documents with payment card
• Check credit card data in billing document

Using PayPal as PSP in sales documents:

• Process sales documents with successful authorization
• Process sales documents with unsuccessful authorization

The SAP digital payments add-on is compliant according to the Payment Card Industry Data Security Standard (PCI DSS).

There will be no storage or processing of credit card numbers in the consumer application, such as SAP S/4HANA Cloud, or via the SAP digital payments add-on.

• Only PCI DSS-certified external partners (Payment Service Providers) process and store the original card data
• Credit card number is replaced by the PSP with a token
• The token is the only identification that is processed and stored in the SAP software

Link to PCI DSS Attestation of Compliance and SAP Trust Center for more details.

The SAP digital payments add-on enables you to connect SAP and non-SAP consumer applications with non-SAP payment service providers (PSPs). Its function is to facilitate secure, end-to-end processing of digital payments.

You can connect to the payment service providers shown via the SAP digital payments add-on, providing you have a contract with the PSP in question.

Note: Digital payment functions delivered are depended on the services consumed and delivered within the consumer application. Verify the covered scenarios with SAP/SAP Help in advance.

The system landscape for payment scenarios using the SAP digital payments add-on is composed of three elements:

• Consumer application: The communication between the consumer application, such as SAP S/4HANA Cloud, and the customer account in the SAP Cloud Platform works using REST Web services and is generally triggered by the consumer application.
• SAP digital payments add-on on SAP Cloud Platform: The SAP digital payments add-on processes the requests from the consumer application and routes them to the relevant external payment service provider (PSP). The add-on contains one core adapter and one adapter for each PSP. Note that messages from the SAP digital payments add-on are issued in English only.
• Payment service provider: The SAP digital payments add-on and the external PSPs communicate using Web services. Most of this communication is synchronous.

The interaction between the system on a high level looks as follows:

1. The consumer application sends a request to the SAP digital payments add-on.
2. Based on the details of the request, the SAP digital payments add-on determines the relevant PSP in a process called routing.
3. The request is then forwarded to the relevant PSP via its adapter where it is mapped into the appropriate format.
4. Connection to PSP is established using the technical requirements of the PSP. Identification of the account at the PSP by the credentials provided by the PSP.

SAP digital payments is a payment hub between payment service providers and SAP components, solutions, or applications that process incoming credit card payments.

The scope item enables the integration between SAP S/4HANA Cloud and SAP digital payments, which allows for the use of credit card payment methods in SAP S/4HANA for incoming payments.

The complete process from settlement using secure tokens via payment service provider advice to final bank statement is covered and automated. Various payment service providers are supported.

The SAP digital payments add-on also supports what are referred to as external payments. External payments are payments made using external channels, such as online or mobile payments systems, rather than payment cards. This part is facilitated by Best Practice Scope Item 2LZ.

Depending on the PSP's functional scope, external payments can be implemented using either a one-step procedure (known as direct capture) where the payment is charged directly to the payer's account without any prior authorization, or a two-step procedure (known as charge with authorization) where the payment is first authorized at the payer's account before being charged.

The Digital Payment - Sales process scope item includes the necessary customizing to enable the use of electronic payments while creating a new sales order. This is enabled via the S/4HANA Cloud Platform application for SAP digital payment, called Payment Hub which provides an integration between payment service providers (PSP) and SAP components, solutions, or applications that process incoming credit card payments.

Payment card information available in the business partner master data can be used when creating the sales order or new payment card data (one-time payment card) can be used in the sales order. When you save the sales order, the authorization of the payment card is executed through the payment hub service.

The credit card authorization can be cancelled by deleting the authorized amount in the sales order. Then a re-authorization can be done after changing the order quantity.

Furthermore, the credit card authorization can be cancelled by rejecting the sales order which has an amount authorized for credit card payment.

The complete process for the payment card scenario can be described as the following:

• Sales representative adds a customer's credit card to their account in SAP S/4HANA Cloud.
• Digital payments connects to PSP and credit card entry UI opens. Sales representative enters credit card data.
• Credit Card will be stored at PSP and tokenized.
• Tokenized credit card data will be stored in the business partner record in S/4HANA Cloud.

• Sales representative uses existing credit card in customer account in S/4HANA Cloud to pay open order items on customer account
• Sales representative selects open order items that will be paid by Credit Card
• Amount of selected open order items will be sent to PSP with credit card information via Digital payments
• Amount will be authorized via the PSP
• The authorization number will be provided to Finance for further processing

When the settlement run is done, the status of the settled credit card payments changes to In Transfer and the payment message is sent to the provider by web services.

The service provider will then forward the message to the clearing house. The clearing house will check the request and send a reply via the provider as to whether it will credit (or debit) the amount of the credit card payments bundled in the message to your account. This reply is automatically updated to the system in the form of the appropriate settlement status.

The following settlement statuses exist:

• Pending: This status means that the message has been sent to the service provider and the system is waiting for a confirmation of the settlement. If no problems occur, the settlement status normally changes to Accepted within a few minutes.
• Accepted: This status means that the message has been successfully sent to the service provider and from the service provider to the clearing house. The clearing house in turn has confirmed that it will settle the payment and sends this information to the system via the service provider.
• Rejected: This status means that the clearing house rejects the settlement of the payment. The payment status in the Payment Monitor changes back from In Transfer to Ready for Transfer. In this case, contact the service provider or the clearing house to find out the reason for rejection, indicating either the provider ID or the clearing house ID.

After you have initiated the credit card payment, you want to inform your PSP that the payment should be made now. In the settlement run, credit card payments are grouped together in one settlement message. When the settlement run is done, the settled items are sent to the PSP via SAP digital payments add-on. This settlement request will forwarded to the clearing house (acquirer bank) by the PSP.

The clearing house will check the request and send a reply via the PSP whether it will credit (or debit) the amount of the credit card payments bundled in the message to your account. The system updates the settlement status.

The credit card advice contains items (taxes, charges) in the cash position that are not captured automatically. It acts like a memo, ensuring that the item is reflected in the current cash position.

1) The AR accountant in SAP S/4HANA requests the credit card advice from the PSPs via Digital Payments

2) The PSP collects the information from the acquirer banks and sends advice data to SAP S/4HANA (via the Digital Payments)

Digital payments collects the information from the PSPs and maps to the formats that the SAP S/4HANA system can understand

3) Advice is posted in SAP S/4HANA and automatically updates the status of the settlements

Note

Note: this advice functionality is not provided by all PSPs - Paymetric, for example, does not support this in the standard - however, Stripe does. Please check with your PSP for details and availability.

This is standard FI-AR functionality for important bank statement details. The bank statement is usually very aggregated and is therefore not useful for clearing (no settlements, no individual transactions). That is why the advice functionality is so helpful for Finance teams.

Sometimes, the granularity of the data is different - the advice might not have all the details, (coming later), or the advice might be not reflect the settlement granularity. The AR accountant could run automated clearing run (periodic job) to clear credit card cash clearing accounts at later point in time. (also standard FI-AR functionality).

• The card acquirer transferred money to our account at our bank.
• The bank statement is imported through standard process (no change in Digital Payments scenario).
• It will then show you that the payment has been received: you will see the incoming payment amount which corresponds to the total net amount of the clearing house statement.

Note

One-time payments with credit card are also supported. This means sales representative does not necessarily have to register a credit card before, but can just use the credit card once to trigger payment for order items. In this case, the tokenized credit card is not stored in the business partner record in SAP S/4HANA.

In case an external payment method is used, you can create the sales document using, for example, PayPal as payment method in the web shop. Afterwards it will be transferred to SAP S/4HANA Cloud as sales document.

The PayPal ID is transferred via the payment hub. The amount will be authorized via the PSP. The authorization number will be provided to Finance for further processing.

Since this process is connected to an external payment method also the integration to the scope item 2LZ - External Payment is needed.

The complete process for the external digital payment scenario can be described as the following:

• A user orders a product and wants to pay using an external payment channel. Approval for the final transaction must be obtained from the PSP.
• The consumer application sends a request for direct capture to the SAP digital payments add-on. Based on the payment type, the relevant PSP is determined, and an initiation request is sent to the PSP in the appropriate format.
• The user approves the direct capture request on the user interface of the PSP, which is called by the consumer application.
• Once approval is obtained, the execution request for direct capture is sent. The result is returned to the consumer application via the SAP digital payments add-on.

• A user orders a product and wants to pay using an external payment channel. Approval for the amount of the transaction must be obtained from the PSP.
• The consumer application sends an authorization request to the SAP digital payments add-on. Based on the payment type, the relevant PSP is determined, and an initiation request is sent to the PSP in the appropriate format.
• The user approves the authorization request in the user interface of the PSP, which is called by the consumer application.
• Once approval is obtained the execution request for authorization is sent. The result is returned to the consumer application via the SAP digital payments add-on.

• The consumer application triggers settlement runs periodically to settle authorized external payments.
• The authorization is sent to the SAP digital payments add-on to be settled.
• Based on the authorization, the relevant PSP is determined, and the request is sent to the PSP in the appropriate format.
• The PSP then processes the settlement and returns the result to the consumer application via the SAP digital payments add-on.

• The consumer application executes a report periodically to request advice details about the digital payments that have been processed.
• This request is sent to the SAP digital payments add-on.
• The add-on requests the advice details from all relevant PSPs.
• The advice details are merged and returned to the consumer application.

This is standard FI-AR functionality for important bank statement details. The bank statement is usually very aggregated and is therefore not useful for clearing (no settlements, no individual transactions). That is why the advice functionality is so helpful for Finance teams.

Sometimes the granularity of the data is different - the advice might not have all the details (coming later) or the advice might be not reflect the settlement granularity. The AR accountant could run automated clearing run (periodic job) to clear cash clearing accounts at later point in time (also standard FI-AR functionality).

• The card acquirer transferred money to our account at our bank.
• The bank statement is imported through standard process (no change in Digital Payments scenario).
• It will then show you that the payment has been received: you will see the incoming payment amount which corresponds to the total net amount of the clearing house statement.

Depending on the SAP digital payments add-on component used, consumer applications can initiate the several services using the SAP digital payments add-on. In terms of the payment card processing that could be payment card creation, payment card payment authorization or payment card payment settlement. This functionality is covered by Best Practice Scope Item 1S2.

The SAP digital payments add-on also supports what are referred to as external payments. External payments are payments made using external channels, such as online or mobile payments systems, rather than payment cards. *This part is facilitated by Best Practice Scope Item 2LZ.

Depending on the PSP's functional scope, external payments can be implemented using either a one-step procedure (known as direct capture) where the payment is charged directly to the payer's account without any prior authorization, or a two-step procedure (known as charge with authorization) where the payment is first authorized at the payer's account before being charged.

Since the scope item 1Z1 is integrated with both the payment card processing and the external payment processing, both features are described below.

• A user in a consumer application requests the creation of a payment card. This request is sent to the SAP digital payments add-on
• Based on settings made by the key user, the relevant PSP is determined and the appropriate Web user interface for entering the payment card details is opened.
• The user enters and saves the payment card data. The request is sent to the PSP, which saves the payment card data and creates a token as identification.
• This token replaces the payment card number. The tokenized payment card data is returned to the consumer application so it can be used.

• A user in a consumer application requests the deletion of a payment card. This request is sent to the SAP digital payments add-on.
• The system checks if this card is used in payment transactions which are not completed. Depending on the result the deletion at PSP is triggered or rejected.
• Based on the card token, the relevant PSP is determined and the request is sent to the PSP in the appropriate format. The result of the request is returned to the consumer application.

• A customer orders a product and wants to pay using a payment card. Approval for the amount of the transaction must be obtained from the card holder's bank.
• The consumer application sends an authorization request to the SAP digital payments add-on.
• Based on the card details, the relevant PSP is determined and the request is sent to the PSP in the appropriate format.
• The PSP then processes the authorization and returns the result to the consumer application via the SAP digital payments add-on.

• A customer cancels an order for which a payment card payment has already been approved.
• The consumer application sends an authorization cancellation request to SAP digital payments.
• Based on the card details, the relevant PSP is determined and the request is sent to the PSP in the appropriate format. The PSP processes the cancellation and returns the result to the consumer application via the SAP digital payments add-on.
• Cancellation of the authorization process is not supported for all payment card types and PSPs. In cases where it is not supported, the authorization remains until it automatically expires. If cancellation is not possible, the consumer application is informed.

• The consumer application triggers settlement runs periodically to settle authorized payment card payments.
• The authorization and card data are sent to the SAP digital payments add-on to be settled.
• Based on the card details, the relevant PSP is determined and the request is sent to the PSP in the appropriate format.
• The PSP then processes the settlement and returns the result to the consumer application via the SAP digital payments add-on.

• In case payment settlement is not possible, e.g. authorization is expired, the customer has the option to perform a direct capture.
• Depending on the PSP, SAP digital payments add-on initiates a direct capture. For example, by sending an authorization request to the PSP in the appropriate format. If the authorization result is positive, SAP digital payments add-on directly charges the payment.

• The consumer application requests a refund when a card payment that has already been settled has to be paid back to the customer, for example in the case of a return. The request contains reference information about the payment to be refunded.
• The PSP then processes the refund and returns the result to the consumer application via the SAP digital payments add-on.

• The consumer application executes a report periodically to request advice details about the digital payments that have been processed.
• This request is sent to the SAP digital payments add-on. The add-on requests the advice details from all relevant PSPs.
• The advice details are merged and returned to the consumer application.

The steps here describe how to register a card with a business partner and how that is later used within the sales order.

To register a payment card use the tile Customer Master - Create / Change. Here, you can add information to your business partners on the tab Payment Cards. Choosing the Create button directs you to the registration page of the digital payments add-on.

The payment card information can now be used when creating a standard sales order in SAP S/4HANA Cloud.

On the Create Standard Order: Overview screen, choose More → Goto → Header → Electronic Payments. In the Card Number / Transaction ID field, select the help and pick the credit card.

The payment card information will be taken over from the business partner master data. The status has been returned as green if the authorization check is passed.

• A user orders a product and wants to pay using an external payment channel. Approval for the final transaction must be obtained from the PSP.
• The consumer application sends a request for direct capture to the SAP digital payments add-on. Based on the payment type, the relevant PSP is determined, and an initiation request is sent to the PSP in the appropriate format.
• The user approves the direct capture request on the user interface of the PSP, which is called by the consumer application.
• Once approval is obtained, the execution request for direct capture is sent. The result is returned to the consumer application via the SAP digital payments add-on.

• A user orders a product and wants to pay using an external payment channel. Approval for the amount of the transaction must be obtained from the PSP.
• The consumer application sends an authorization request to the SAP digital payments add-on. Based on the payment type, the relevant PSP is determined, and an initiation request is sent to the PSP in the appropriate format.
• The user approves the authorization request in the user interface of the PSP, which is called by the consumer application.
• Once approval is obtained the execution request for authorization is sent. The result is returned to the consumer application via the SAP digital payments add-on.

• A user cancels an order for which an external payment has already been approved.
• The consumer application sends an authorization cancellation request to the SAP digital payments add-on.
• Based on the type of the payment, the relevant PSP is determined and the request is sent to the PSP in the appropriate format.
• The PSP then processes the cancellation and returns the result to the consumer application via the SAP digital payments add-on.
• If cancellation is not possible, the consumer application is informed.

• The consumer application triggers settlement runs periodically to settle authorized external payments.
• The authorization is sent to the SAP digital payments add-on to be settled.
• Based on the authorization, the relevant PSP is determined, and the request is sent to the PSP in the appropriate format.
• The PSP then processes the settlement and returns the result to the consumer application via the SAP digital payments add-on.

• The consumer application requests a refund when an external payment that has already been settled has to be paid back to the customer, for example in the case of a return.
• The request contains reference information about the payment to be refunded.
• The PSP then processes the refund and returns the result to the consumer application via the SAP digital payments add-on.

• The consumer application executes a report periodically to request advice details about the digital payments that have been processed.
• This request is sent to the SAP digital payments add-on.
• The add-on requests the advice details from all relevant PSPs.
• The advice details are merged and returned to the consumer application.