Using External Customer Payments (2M0)

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 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

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.

This scope item enables the external payment method, which can be used with the help of external billing systems. The payment can be triggered via an external billing system and is processed by the External Digital Payments (2LZ) scope item.

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 a tokenization approach.
• Integration - SAP digital payments is aligned with SAP roadmaps and integrated into your business process flows.
• Reduce TCO - It's 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 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. Please 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 scope item 2M0 is integrated with several other items in order to fulfill its purpose. The External Customer Payments integrate with the item 1S0 - Customer Payments as the EBPP (Electronic Bill Presentment and Payment) user interface. With this interface the customer is able to assign certain payment methods to open items.

Using the External Customer Payment function the customer is in a position to link to external payment methods, like PayPal, to clear open items. 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 customer payment scenario can be described as the following:

• A user orders a product and wants to pay using an external payment channel. They assign, for example, an external payment method with Customer Payment Portal.
• Approval for the final transaction must be obtained from the PSP.
• The consumer application, in this case Customer Payments, 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.

• 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.

• For the reconciliation of items the information from the payment run, digital payment advice and bank statement is considered.
• The payment run is clearing the customer open items against an external payment clearing account.
• This clearing account is offset by the digital payment advice in the next step against external payment transfer account.
• This transfer account in turn is cleared by the external bank statement against the bank subaccount and finally against the bank main account.

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).

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 the 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. Since the scope item 2M0 is meant to support external payments it works together with 2LZ - External Digital Payments.

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.

1. 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.
2. 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.
3. The user approves the direct capture request on the user interface of the PSP, which is called by the consumer application.
4. 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.

1. 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.
2. 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.
3. The user approves the authorization request in the user interface of the PSP, which is called by the consumer application.
4. 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.

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

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

1. 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.
2. The request contains reference information about the payment to be refunded.
3. The PSP then processes the refund and returns the result to the consumer application via the SAP digital payments add-on.

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

To use the External Customer Payments functionality, log on to the Customer Payments Portal and open the Pay My Bills tile on the SAP Cloud Platform.

Here you can find the open bills for your account. In the details section you can assign an external payment method, such as PayPal, to some open items. After approving the payment on the PayPal account, return to the Customer Payments Portal. Here you can see the assigned payment type and the transaction ID for this specific item.

In the SAP S/4HANA Cloud system you use the Manage Automatic Payments SAP Fiori app to clear customer invoices that have an external payment method assigned. Select the External Payment Method (Direct Debit) to start the processing of the automatic payments. Customer open items using the external payment method are cleared with the payment run.

Caution

Integration of External Payments to Digital Payments (2LZ) provides additional procedures for external payment fund transfer that must be completed after this scope item.