Applying the Digital Payments Features for Account Receivables

The Two-Step process involves an authorization step and a capture step, and it’s commonly used when orders and deliveries are separated by time.

During the authorization step, consumers give their card data to call center agents, check out in online stores, or place orders via mail. Once the business process is completed and goods are dispatched, the final payment amounts are determined, and open items are posted to the Accounts Receivable – digital payments account.

To complete the capture step, the Payment Card Settlement job within the Schedule Accounts Receivable Jobs app is used to select authorized payments for which the associated transaction has been completed. The selected payments are then sent to the PSP via the SAP digital payments add-on, resulting in open items against the PSP to the account Bank Accounts – Payment Service Provider – Clearing.

After this, automatic reconciliation can be performed if the PSP supports digital advice processing. The SAP Digital Payments: Advice Processing job within the Schedule Accounts Receivable Jobs app is triggered to reconcile captured payments, as well as additional transactions such as fees, returns, or manual payments. Transactions that confirm captured payments are reconciled using the periodic job Automatic Clearing in the Schedule General Ledger Jobs app.

Finally, the PSP pays out the funds to the real bank account, which is processed using the usual bank statement processing, and is then posted to the Bank Accounts – Payment Service Provider – Transfer account. This account might require manual clearing using the Clear GL Accounts – Manual Clearing app, as PSPs often do not provide sufficient reference information.

The two-step payment method is the most comprehensive payment process, consisting of an authorization stage and a capture stage. It's often employed when there's a time gap between orders and deliveries

A one-step digital payment, also called a direct capture payment, does not require previous authorization. It’s commonly used for immediately delivered goods or services, such as digital downloads.

When making purchases at online stores or through company portals, consumers make payments directly; a process known as the capture step.

When the delivery takes place, the following business processes are already completed:

• Determining the final payment amounts.
• Posting open items against the Payment Service Provider (PSP) on the Bank Accounts – Payment Service Provider – Clearing account.

If the PSP supports digital advice processing, automatic reconciliation can be done using the SAP Digital Payments: Advice Processing job in the Schedule Accounts Receivable Jobs app. This job also returns additional transactions, such as fees, returns, or manual payments, which were previously unknown to the SAP S/4HANA Cloud system and must now be recorded. Transactions confirming captured payments are reconciled using the periodic job Automatic Clearing in the Schedule General Ledger Jobs app.

The PSP transfers the funds to the company’s real bank account, which is processed through their usual bank statement processing and is then finally posted to the Bank Accounts – Payment Service Provider – Transfer account. Payments in this account might require manual clearing using the Clear GL Accounts – Manual Clearing app if the PSP does not provide sufficient reference information.

A one-step digital payment, also known as a direct capture payment, is a streamlined method that eliminates the need for prior authorization. It is often used for goods or services that are delivered immediately, like digital downloads.

External payments are initiated externally from SAP S/4HANA Cloud, for instance, when:

• A payment is made with a card through the PSP's dashboard by a company employee during a phone call with a customer.
• A digital payment is made through an online payment system.

This specific payment method is only supported if the PSP has digital advice processing capabilities. In this case, the payments are automatically reconciled and transferred to the SAP S/4HANA Cloud system for posting. The SAP Digital Payments: Advice Processing job in the Schedule Accounts Receivable Jobs app is used for this purpose. Upon posting, the payment is recorded as a liability on the appropriate PSP transfer account, reconciled against the customer account and the related invoice (open item). Any associated fees are also factored into this posting.

The PSP then disburses the funds to the company's actual bank account. The payout is processed through standard bank statement processing and ultimately posted to the Bank Accounts – Payment Service Provider – Transfer account. If the PSP does not provide adequate reference information, payments in this account might require manual reconciliation using the Clear GL Accounts – Manual Clearing app.

External Payments are triggered outside of SAP S/4HANA Cloud, such as when a digital payment is processed through an online payment system. Consequently, these payments are automatically reconciled and transferred into the system for posting.

Correctly handling authorized credit card payments within a financial system is crucial for maintaining accurate accounting records and ensuring smooth financial operations.

Authorized credit card payments are transferred to Accounts Receivable through various channels. These include the Customer Portal, where customers log into their personal accounts to make payments directly using their credit cards. Another channel is the Online Shop, or point-of-sale systems, where payments flow through integrated systems such as online shopping platforms or physical point-of-sale (POS) systems, often involving the sales or distribution departments before eventually reaching the financial system.

Once payments are authorized and received, they’re represented in the financial system as open items in the Accounts Receivable – Credit Card Clearing Account (General Ledger Accounts). These entries ensure that each transaction is tracked until it’s fully reconciled and cleared. The corresponding outstanding items on the Customer Account are automatically cleared once the payment is recorded, improving efficiency, and reducing the risk of manual error.

Each payment transaction contains key information that helps in authorization and tracking process. This includes a credit card token, which is a substitute for the actual credit card number and is used to enhance security by ensuring that sensitive information is protected during the transaction process. Additionally, authorization data, which encompasses details related to the credit card issuer's approval of the payment is stored. This data includes authorization codes, transaction timestamps, and other relevant information, providing a comprehensive audit trail.

These automated processes reduce the risk of manual recording errors, and clear tracking of transactions ensures precise financial reporting, enhancing accuracy. The use of credit card tokens safeguards sensitive customer information, while authorization data offers a reliable record necessary for auditing and dispute resolution, thereby improving security. Streamlining the process from payment authorization to clearing reduces the administrative burden on financial staff and allows for quicker updates to financial statements and customer accounts, thus enhancing operational efficiency.

Authorized credit card payments will then be settled (or captured) using the standard Credit Card Settlement report. This report plays a crucial role in finalizing the payment process by ensuring that approved transactions are fully processed and accounted for within the financial system.

The settlement report creates batches of transactions and sends them to the PSP using the SAP digital payments add-on. This automated process streamlines the transfer of transaction data, enhancing the settlement process's efficiency and accuracy. By grouping transactions into batches, the system can handle large volumes of data more effectively, reducing the risk of error, and ensuring all payments are systematically processed.

Once the settlement report has sent the batches to the PSP, the items on the Accounts Receivables (AR) Credit Card clearing account are cleared and posted to a cash clearing account for credit cards. This step finalizes the accounting process for each transaction, ensuring that the funds are correctly represented in the organization's cash accounts.

This integrated and automated approach not only enhances the accuracy and efficiency of the payment settlement process but also supports the overall reliability of the organization's financial reporting.

SAP Digital Payment Advice captures information on the processed transactions at the PSP. This information is vital for ensuring that the details of each transaction are meticulously recorded and reconciled within the financial system. By matching the payment details captured from the payment service provider with internal records, the system can quickly identify and address any discrepancies, ensuring that the financial statements are accurate and up to date.

The advice information can be requested using the Digital Payments Advice report in SAP S/4HANA. This report can be run periodically to pull in the latest data from the PSP. Once the advice is integrated, the data is processed into Accounts Receivables. As part of this process, items on the cash credit card clearing account are cleared and posted to a Cash Transfer for credit cards account. This step takes into account any charges associated with the credit card transactions, ensuring that the net amounts are correctly reflected in the financial records.

The Cash Credit card clearing account is cleared automatically by a periodic General Ledger (G/L) automatic clearing report. This periodic report runs at scheduled intervals to ensure that any remaining balances in the clearing account are reconciled and posted to the appropriate accounts, thereby maintaining the accuracy of financial records.

SAP Digital Payment Advice captures information of the processed transactions by the payment service provider.

The next step involves transferring collected money to a bank account via the standard bank statement functionality. This step is crucial for ensuring that the funds from processed credit card transactions are accurately recorded in the organization's bank account.

Corresponding bank statement items will be posted against the Cash Credit card transfer account. This transaction records the transfer of funds from the internal clearing account to the organization's actual bank account, ensuring that the financial records reflect the true status of the funds.

The clearing of the Cash Credit card transfer account can be automated or done manually, depending on the reference information provided by the Payment Service Provider (PSP). This clearing step is necessary to verify that the amounts transferred match the amounts recorded in the financial system. It involves cross-checking the reference information, such as transaction IDs and amounts, to ensure that each transfer is correctly accounted for, thus supporting the overall reliability and accuracy of the organization's financial management system.

The tokenization approach in the SAP digital payments add-on is designed to enhance security and compliance with data privacy regulations while facilitating seamless transaction processing. The original credit card details, including the Primary Account Number (PAN), are stored at the PCI-certified Payment Service Provider (PSP). These details are never stored directly within the SAP system, thereby reducing the risk of data breaches.

The PSP is responsible for generating a token for the credit card. This token is then used to replace the sensitive credit card information within SAP's systems. The tokenized credit card details, including cardholder information, are stored in the SAP digital payments add-on on behalf of the consumer application. This ensures that, while the necessary payment information is retained for transaction processing, it’s done in a secure and compliant manner.

Tokenized credit card data is considered personal data under Data Privacy Regulations, but not classified as sensitive personal data. This distinction simplifies compliance with privacy laws, while still ensuring that the data is handled with a high level of security. The deletion of data after it has been used is initiated by a request from the consumer application, ensuring that data is not retained longer than necessary.

The consumer application has the capability to read the tokenized card data for providing disclosure functionality to the end-user, such as showing the last four digits of the card number for verification purposes. However, users of the SAP digital payments add-on do not have read access to the tokenized data, further securing the sensitive information from unauthorized access. Additionally, no logging of read accesses from the consumer application is required, streamlining the process and reducing overhead.

The credit card token is stored in a mapping table that links internal and external tokens. The SAP digital payments add-on creates an internal digital payment token for all external tokens provided by PSPs. This internal token is used within SAP's systems to reference the transaction without exposing the original card details.

The deletion of data is managed through the deletion API, which is triggered by the consumer application when the data is no longer needed. This ensures that data is purged in a timely manner, adhering to data minimization principles. Again, the SAP digital payments add-on users have no read access to the tokenized data, maintaining strict control over who can view sensitive information.

The credit card token is a crucial part of any transaction processed and is stored within the SAP digital payments add-on. Despite its importance to transaction processing, the security protocols in place ensure that the SAP digital payments add-on users remain unable to access sensitive data directly.