Credit Card Processing in SAP

Robert Pulaski – Sr. Manager/Architect

Learning Points

• Why automate credit card processing?

• A basic understanding of credit card processing

• An overview of the process and related accounting for credit card processing in SAP

• Highlight some important configuration in the IMG

• Discuss implementation options and issues

• Highlight some best practices

Why automate credit cards in SAP? Answer - Improved ROI

• Improve cash flow by reducing outstanding receivables from 30 – 90 days to 1 to 3 days

• Reduce bad debt

• Possibly reduce paper invoicing costs

• Increase transaction efficiency

Terminology

• Merchant ID – unique id identifying the supplier(you)

• Processor (Clearing House) – provides authorization and settlement services

• Merchant Bank – supplier’s bank(your bank)

• 3rd Party Provider – provides the interfacing solution to allow SAP to communicate with the processor

Process Flow for Credit Card Processing

Buyer gives credit card info

Supplier requests authorization and at a later time batch settlement

Processor provides authorization and settlement services

Banks issue and receive funds

Process Overview in SAP

• Save valid sales order• Authorization request sent (real-time)• Authorization response - accept/decline (real-time)

• Ship

• Bill

• Settlement (batch)

Save Valid Sales Order – VA01

Authorization Response – VA01

Authorization Response – VA01

Document Flow – VA01

Billing – Accounting Document – VF01

Accounts Receivable Customer – FBL5N

GL Account Open Item – FBL3N

Settlement – FCC1

Settlement – FCC1

Settlement – FBL3N

IMG Configuration

IMG Configuration –Setting Up Card Types

IMG Configuration –Setting Up Merchant ID

IMG Configuration – Assign Merchant ID

IMG Configuration – Account Determination

IMG Configuration – Assign Clearing Account

Implementation Options

• Build a custom program(s) to interface with the processor(s)

• Purchase a 3rd party solution from vendors such as Cybersource or Paymetric

• Manual (as a backup?)

Pros/Cons Custom Programs

• Pros• Lower initial external cost • Possibly lower transaction costs• If it already works – don’t fix it?

• Cons• Custom development costs• Possible custom configuration in SAP• Maintenance of custom code

Pros/Cons 3rd Party Solution

• Pros• No/little custom development costs• Less custom configuration in SAP• Maintenance/support of 3rd party vendor• Quicker to implement?• Can offer additional functionality beyond SAP delivered

• Cons• Initial external cost• Possibly higher transaction costs• Maintenance/support of 3rd party vendor

Implementation Issues

• 3rd Party Installation • Servers• Access keys• RFC calls• Etc..• Make sure you have good Basis and IT people if you attempt

installation yourself. Otherwise best to have the 3rd party provider handle the installation.

Implementation Issues

• Authorization horizon/validity• Authorization window – number of days within a shipping

confirmation window before a valid authorization can be issued• Authorization validity period – number of days an authorization is

valid before a new authorization is required• Typically 28-30 days

• Back orders can be a royal pain!

Implementation Issues

• Additional charges• Exact total for additional charges such as freight not known• Solution – user exit

Implementation Issues

• Split shipments• Partial or multiple shipments can require several authorizations• Solution – user-exit

Implementation Issues

• Multiple cards on one order• Different credit limits• Different credit card owners• CRM – different capabilities (though similar process)

Implementation Issues

• Foreign Currency• Make sure the clearing house you use can handle all currencies

required

Best Practices

• Encrypt credit card data via either 3rd party or SAP (4.6c)• Can require OSS notes

• Limit access to credit card information via security• Only those who need access

• Additional fraud checks• Address check• CID – Card Identification Number• Can require OSS notes or user-exits

Additional Transactions

• FCC2 – Repeat Settlement

• FCC4 – Display Logs

• FCC3 – Delete Logs

• FBRC – Reset Cleared Items

• FCCR - Standard Reports

• VKM1 – Credit Hold Report

• VCC1 – Payment Card Credit Hold Report (New)

Different Flavors of SAP

• CRM

• SAP Retail and POS

• Etc…

Summary

• Automated credit card processing can be efficient and enhance ROI

• In most cases buying a 3rd party solution is going to be the best option compared to building a series of in-house custom programs

• There will be lots of issues that need to be thought out carefully

• Take credit card fraud seriously

Q&A

Robert PulaskiSenior Manager - ArchitectHitachi Consultingwww.hitachiconsulting.comDirect: 804.291.6009rpulaski@hitachiconsulting.comInspiring your next success! ®

1103 / Credit Card Processing in SAP

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