SMTP Settings

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If the application will be using the SMTP Auth for sending of mails, below are the requirements. 

• An account with a user mailbox which will be used for the SMTP authentication. The email address of the mailbox you are using will appear as the sender of the email. 
• The Authenticated SMTP protocol must be enabled for the mailbox. See screenshot below.
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• MFA must NOT be enabled for the account.
• Security Default must NOT be enabled for the organization. 
• The SMTP server settings are below
  • SMTP server address: smtp.office365.com
  • PORT: Port 587 (recommended) or port 25
  • TLS/StartTLS should be enabled
  • Enter the username and password for the mailbox you are using. 

Basic authentication has been deprecated however, Microsoft understands that most devices and clients have not been designed to use Modern Authentication and this is why Microsoft is yet to disable Basic Authentication for SMTP Auth. See the article below.

• https://learn.microsoft.com/en-us/exchange/mail-flow-best-practices/how-to-set-up-a-multifunction-device-or-application-to-send-email-using-microsoft-365-or-office-365

NOTE: I have seen scenarios where the Authenticated SMTP protocol is already enabled but the feature still doesn't work after following the above steps. Disabling the authenticated SMPT, click on Save and reenabling the feature back resolves the issue sometimes in case you experience that.