Credit Card Processing in SAP

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Credit Card Processing in SAP

• Robert Pulaski Sr. Manager/Architect

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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

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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

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Terminology

• Merchant ID unique id identifying the
  supplier(you)
• Processor (Clearing House) provides
  authorization and settlement services
• Merchant Bank suppliers bank(your bank)
• 3rd Party Provider provides the interfacing
  solution to allow SAP to communicate with the
  processor

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Process Flow for Credit Card Processing
Supplier requests authorization and at a later
time batch settlement
Processor provides authorization and settlement
services
Buyer gives credit card info
Banks issue and receive funds
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Process Overview in SAP

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

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Save Valid Sales Order VA01
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Authorization Response VA01
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Authorization Response VA01
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Document Flow VA01
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Billing Accounting Document VF01
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Accounts Receivable Customer FBL5N
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GL Account Open Item FBL3N
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Settlement FCC1
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Settlement FCC1
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Settlement FBL3N
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IMG Configuration
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IMG Configuration Setting Up Card Types
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IMG Configuration Setting Up Merchant ID
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IMG Configuration Assign Merchant ID
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IMG Configuration Account Determination
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IMG Configuration Assign Clearing Account
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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?)

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Pros/Cons Custom Programs

• Pros
• Lower initial external cost
• Possibly lower transaction costs
• If it already works dont fix it?
• Cons
• Custom development costs
• Possible custom configuration in SAP
• Maintenance of custom code

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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

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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.

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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!

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Implementation Issues

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

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Implementation Issues

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

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Implementation Issues

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

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Implementation Issues

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

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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

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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)

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Different Flavors of SAP

• CRM
• SAP Retail and POS
• Etc

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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

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QA

• Robert Pulaski
• Senior Manager - Architect
• Hitachi Consulting
• www.hitachiconsulting.com
• Direct 804.291.6009
• rpulaski_at_hitachiconsulting.com
• Inspiring your next success!

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1103 / Credit Card Processing in SAP
Session Code