Payment files are generated using Automatic Payment Programs. These files are then encrypted and transferred to the bank. ESB picks up these payment files from SAP folder and shares the same with the bank through MIM job. Bank reads the payment files only in format specified by the bank itself.
DME stands for “Data Medium Exchange.” To use DME, payment medium workbench is used.
Note: For ACH IAT Data Medium Exchange Engine is not required and cannot be used as well. However, it is still a part of DME.ACH is not a PAYM tree type.
This blog covers ACH IAT which creates a .dat or.txt file. It is assumed reader has basic knowledge on APP and is aware of FBZP configs.
Payment medium workbench cannot be used along with classic payment programs as shown below:
Getting started with DME implementation:
Below information should be available from business and bank:
- Bank will provide below information:
- Bank format from bank
- Encryption key from the bank
- SPOC from Bank to test files; either you can have a test link or a bank SPOC who will get results from the bank in relation to the payment file uploaded on the bank test folder
- Naming convention from bank- this is very important as the bank will recognize the file with a specific naming convention.
Note: Naming convention might be different for test folder and production folder. your bank will have a seperate test folder to test the file format. Your ABAPer will help you concatenate the naming convention in required format.
- Collect below information from business:
- Business encryption key.
- Details of payment methods.
- Business tax numbers.
- Details on how the business wants to display its name on the form.
- Multilingual requirements on advice forms which will be printed along with payment files generated.
- Most importantly understand how business is making payments.
Understanding ACH IAT formats:
ACH stands for Automated Clearing House.
Benefits of using ACH payments
- Business can execute international transactions without having a foreign bank account.
- Enhanced payment security using NACHA IAT.
NACHA – National Automated Clearing House Association makes International ACH Transaction
ACH- ACH payment methods are used for USD currencies. Business can pay using this method for USD currencies if the below criteria are matched:
Who can use ACH IAT payment method?
Any business who fulfills any one of the following conditions:
- Has an account that is debited/credited as part of the payment transaction.
- Receives or makes payment directly
- Serves as an intermediary in the settlement of any part of a payment transaction
Getting started with implementing ACH IAT format:
- Implement 2 SAP notes- 1343600 and 631281. Let’s understand these SAP notes first to get started.
- Implement note 1343600 if your bank is using IAT format.
- Implement note 631281- if the bank is using CTX format
What is ACH IAT format?
ACH IAT is a new ACH format. Usually, banks nowadays use this format. IAT stands for International ACH transactions. To have a successful implementation of ACH you must have a foreign correspondent bank. ACH IAT involves addenda records for remittance details for ACH payments.
We will discuss sap note 1343600 as I am covering only ACH IAT and not ACH CTX. However, one can implement CTX in a similar way as IAT.
SAP note: 1343600
You will need an ABAPer to implement this note. This note will create data elements and addenda record types. which will be used at the time of creating ACH payment file as per the format specified by the bank.
What is the addenda record?
Addenda record is a supplemented record that is required to identify the account holder or completely notify the receiver of details. In short, these records are additional reference records, your ABAPer will be able to help you get these records in place as expected by the bank using data elements. you will have to maintain correct vendor master bank records too.
understanding ACH IAT format:
ACH IAT format will mostly comprise of below structure:
- File header
- Batch header
- Entry detail
- Batch control
- File control
Let’s understand the structure in detail
- File header:
The file header will contain record type, originator name, destination name, transmission date, transmission time- these will have a description in your format from the bank as to what bank is expecting for which field. You will have data elements in place. you can choose the correct set of data elements from below structures:
For example- field name “immediate destination” in your bank format with 10 characters- the field will be UBNKL which is our house bank number- this field is from REGUH table. This field is a part of FPAYHX structure. Maintain bank number in FBZP configuration in house bank since this is our bank account number.
- Immediate originator number in ACH file format: this number is DTFIN field which is originating company number. This is maintained in FBZP config in house banks under DME section as shown below:
2. Batch header record:
Batch header record will comprise of- record type, IAT indicator, Foreign exchange indicator, Foreign exchange reference indicator, Service class code.
Above batch header records will appear correct only if you have maintained format supplement in SPRO. Service class code is very important and you have 2 options to maintain service class code; refer screenprint below on how to maintain format supplement:
Define instruction keys. these instruction keys will be used to populate service class code. this code will be used by the bank as purpose code.
Define instruction details as per your format for the keys defined above.
Maintain instructions as shown below. these are service codes in your format:
Assign this code to your house bank as shown below. Every time you make a payment using ACH this instruction key is defaulted. Another option is to update this instruction key in FB60 at the time of posting invoice; which is not possible during MIRO. hence it is advised to update this instruction at the house bank level.
3. Detail record:
Detail record consists of record type, addenda record, transaction code, ABA bank routing number. ABA bank routing number is bank key and bank account number of the beneficiary. This should be updated properly in the vendor bank master record. A number of addenda records and addenda records come from note to payee. Note to the payee is maintained in transaction code OBPM2 as shown below:
create a new entry for ACH IAT.
Select the note to payee layout using customizing. This option will give the flexibility to customize the note as per your specification.
Double click on default note to payee folder to customize your note to the payee.
You can have your own specification in the above screen.
Select on the preview to check how your note to the payee will appear in the file.
4. Detail record:
Detail record consists of addenda record indicator, amount, unique trace number. Addenda record indicator will be picked up from standard FM. unique trace number will be used to trace the payment document, it solely depends on business to business on how they want to trace the payment. this is unique for each payment. This will be maintained by your ABAPer in an FM which you will have to assign to ACH in transaction code OBPM2.
5. File trailer record:
This part of your file will summarize the content of your file. The total number of a batch count, the total number of addenda records, the total amount paid in the file. This is done using function modules, ask your ABAPer to have a check if FM’s are working as expected.
Summary of ACH IAT implementation:
- You cannot copy ACH TO “Z” ACH
- It is recommended to make minimum changes since you will be making changes directly in standard ACH format delivered by SAP.
- ACH IAT format is not a PAYM type structure, hence it does not use DME engine.
ACH IAT in a nutshell:
- Keep a folder in a directory ready to download the file generated.
- Keep FBZP configuration in place
- Update house bank number in FBZP. this will be your immediate originator number in the format
- Create variant in OBPM4 against house bank
- Assign ACH in PMW in FBZP config
- Create a note to the payee in OBPM2
- Assign custom FM’s in OBPM1
- Have encryption in place
- Assign the instruction key at the house bank level.
Have all your FBZP configuration in place to successfully generate ACH IAT file format.