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Small and medium business | Business Central, N...
Suggested Answer

SMTP Email Setup in Business Central using OAuth 2.0

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Posted on by 2,977 Super User 2026 Season 1
Hey Community,
 
My requirement is very simple - I have one Exchange Plan 1 License assigned to a user's account (which is not a global admin account). This email needs to be used for sending the email notifications to be sent based on the approval workflow. We have setup a workflow and added the "Approval" entry in Workflow Notification setup with userid as blank.
 
Now, this email account works well for the first level approval and sends the email - "This purchase invoice requires your approval", but then the emails stops working, and in the email outbox I see this error - 
 
"The SMTP server rejected the authentication request, as the authentication data is incorrect. Verify that your Username and Password are correct and that the SMTP server supports the specified authentication type (OAuth 2.0). SMTP error code: 535. Status code: 535:"
 
Is there anything that I am missing in workflow or email account setup?
 
Is there any way I can setup an email account using OAuth 2.0, via which emails can be shot despite of which user is logged in?
 
I tried basic authentication as well in SMTP setup via App Password, but is seems to be not working as well.
 
Any help would be appreciated.
 
 
EDIT 01: I tried using the Microsoft 365 Account Type (first option while setting up the email accounts)
 
When I sent the test email from the account that has ESSENTIAL + EXCHANGE license which is setup in M365 account, it sends the test email.
 
When I use the account that only has essential license to send approval request, email outbox says this error - Failed to send email. Error: The mailbox is either inactive, soft-deleted, or is hosted on-premise. Status code: 404.
 
When I approve the email from the account that has Premium license, then i get this error - Failed to send email. Error: The user account which was used to submit this request does not have the right to send mail on behalf of the specified sending account., Cannot submit message. Status code: 403
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  • Suggested answer
    Dhiren Nagar Profile Picture
    2,762 Super User 2026 Season 1 on at
    Hi,
     
    This is because Microsoft is rolling out Basic Authentication in SMTP and hence now SMTP email setup with Basic Authentication won't work.
     
     
    You can follow below guide to complete the setup of SMTP with OAuth2.0. This will make sure that your SMTP email setup works correctly in future upgrades as well.
     
     
    Now as far as Email notification is concerned you need to make sure that this SMTP email should be specified as either Default Email Account in Email Account list or should be assigned with Email scenario for Workflow notification.
     
     
     
    Regards,
    Dhiren
  • Suggested answer
    Aman Kakkar Profile Picture
    2,977 Super User 2026 Season 1 on at
    Also, 
     
    Is it necessary to have all the users to be there in the "Recipients -> Mailboxes" in the Exchange Admin (https://admin.exchange.microsoft.com/) in order to trigger the emails? 
     
    I tried adding one Exchange Plan 1 license to a user and it showed up here automatically, and then the emails started triggering for that user. And the first user from whom I removed the Exchange Online license - that started throwing error and was unable to trigger emails.
     
    Is there any way I can add all the users in the Mailboxes in Exchange Admin without assigning an Exchange License?
  • Suggested answer
    OussamaSabbouh Profile Picture
    11,024 Super User 2026 Season 1 on at
    Hello,
     
    This isn’t a workflow issue; it’s expected behavior with Exchange Online. Basic auth / app passwords no longer work, and OAuth only works if the sender has a real Exchange mailbox and proper permissions. Essentials-only users can’t send mail (404 error), and logged-in users can’t send from another mailbox without Send As rights (403 error). The reliable setup is to use a shared mailbox with OAuth, grant Send As permission to approvers or a service account, and configure the email account in Business Central as Microsoft 365 so all approval emails are sent from that shared mailbox regardless of who is logged in.
     
    Regards,
    Oussama Sabbouh
  • Suggested answer
    YUN ZHU Profile Picture
    98,059 Super User 2026 Season 1 on at
    Hope the following can give you some hints as well.
    Exchange Online to retire Basic auth for Client Submission (SMTP AUTH)
     
    Hope this helps.
    Thanks.
    ZHU
  • Greg Kujawa Profile Picture
    787 on at
    Is there any way I can add all the users in the Mailboxes in Exchange Admin without assigning an Exchange License?
     
    As far as I'm aware the user's license allows the user's mailbox. Once you grant an Exchange Plan 1 license to a M365 user, that's the trigger that creates the mailbox and connects it. And if you remove the license from a user, the resources are likewise disconnected. 
     
     

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