With proliferation of web commerce , there is an inherent need to process credit card order in various ERP applications. The focus is only reducing, if not eliminating, the risk of non-payment while doing business over the web specially when selling to one time or retail customers. SAP has inbuilt functionality to handle credit card orders, however only a few companies have put this feature into practice. In fact, less than 10% of the customers I have come across in the last 13+ years of my consulting experience, have configured the process. One probable reason for this is that majority of the customers haven’t integrated their SAP environment with any e-commerce platform or market places like Amazon or eBay as yet.
Needless to say that they are missing out on a huge opportunity. Millions of retail buyers as well as dealers are trying to find a way to buy products in the most hassle free manner. However not many manufacturers list their products online and hence they have to buy products in-directly from stockist who are smart to list the products on marketplaces or sell the products through their own web-commerce platform. Having understood the context, let us look at key steps on how credit card processing can be enabled within SAP.
Payment Gateway and External Capture of funds
Storing sensitive data within any internal application has vast ramifications in event of a security breach. Managing credit card related details is one business case. Storing it is a strict no for organization, if they are not specialized in data security and data encryption. Hence external payment gateways come into picture. PayPal, Authorize.Net and Stripe are some of the more popular ones.
Thus it can be said that when a buyer is checking out and putting in the credit card details, the verification of the credit card as well as financial transaction is carried out by these gateways. The credit card information is never stored by the merchant. Thus in our case these transactions are external to SAP.
Understanding the process of credit card authorization and fund capture
A key difference when it comes to traditional order and credit card is that at the time of processing the order, the credit card is first validated and also fund equal to order amount (including tax and shipping charges) is blocked. Hence if the credit card had a credit availability of $2,500 and the order amount including tax and shipping is $700, after successful order placement, the available credit balance would be $1,800 and $700 would reflect as blocked under the name of the merchant.
Usually, when the goods are shipped, the funds are captured from the credit card. However, the capturing of the funds can also be done at the following stages
- Funds captured at order placement – Most of the payment gateways allow capturing of the fund at the time of order placement. Hence the funds are collected from the card at quite an early stage in the order life-cycle.
- Funds capture at Post Goods Issue – The funds could also be captured whenever the goods are dispatched. This is the most usual business case.
- Funds capture at POD – Some of the merchant capture the funds at the time the goods are received by the customer. This is usually in case where the customers are trustworthy and the products are not made to order.
Configuration needed in SAP for enabling credit card process
Though a detailed configuration is needed in SAP to handle credit card payments, the steps mentioned and shown in the slides below are the key ones for the process to work. They cover all the concepts that you need to understand for carrying out an end to end processing of such an order.
Step #1. Defining Card Types and their respective authorization validity
You can define different card types which are allowed and also maintain the authorization validity for various cards. The configuration node is shown in slide. It may be a good starting point to ask your payment gateway.
Step #2 Maintain clearing house for the card payments
Under this we need to configure the account determination settings for credit card payments. The clearing account is the G/L account where the postings against customer receivables are offset intermediately until the settlement is done. As mentioned earlier the accounting document is already in cleared mode for a credit card order. The customer receivable is always cleared by an entry against this account.
Step #3 Maintain Settlement Account
In this setting, the clearing account is maintained for the G/L account mentioned above. When the accounting document is posted, the account maintained in step b is posted to. The settlement account is the final clearing account.
Difference between a SAP Credit Card and a non Credit Card order
The credit card information is passed on to the order in the header data as shown below. As can be seen, for this order, the total authorized amount is EUR 941.61. The card numbers are not captured as the authorization is done in an external payment gateway.
When the post goods issue and invoicing happens in SAP, the accounting document is automatic cleared and there are no customer open items. As can be seen the account receivables have been cleared and posting has happened in the clearing house G/L. A periodic settlement program (transaction FCC1) clears the above temporary account and posts to the settlement account.
Enabling Credit Card processing for global commerce
Agile companies are leveraging multi-channel commerce and spreading their reach and doing more business targeting customers across the globe. Credit card configuration gives these companies an edge by better control of how they sell in the new digital economy in a risk free manner.
If you have not yet started pondering over how your enterprise can benefit from the eCommerce, it is high time that you start building your multi-channel commerce strategy. Listing your products directly from SAP to market places and getting orders from there is also something which your organization must explore.