EDI, or electronic data interchange, refers to a particular structure of data transmission that occurs between organizations by means of electronic outlets. Generally it is used to transfer electronic documents from one business to another without direct human intervention.

Many people may read this and confuse EDI with something along the lines of email – but the truth is that EDI is a little more elusive and most causal computer users would find it slightly less user-friendly. EDIs are often used in lieu of paper checks or in the transmission of highly sensitive documents, simply because through an EDI there is less chance of tampering than there is with more causal means of communication.

The fact of the matter is that most modern business still uses EDIs when it comes to electronic commerce transactions. The technology behind an EDI is relatively old when compared to other modern communication methods – it first came into popular use in the 1980s. Despite the fact that it is an older system and much more “efficient” technology such as the Internet and XML web services have come out onto the scene, many companies still choose to use EDI for its reliability and security.

An additional benefit to using EDI above other methods of information exchange actually lies within its obscurity outside of the electronic commerce world – not as many laypeople understand EDI and thus the chances of any particular transaction falling prey to viruses and other such maladies that more popular forms of communication – such as email – is smaller. Occasionally, general obscurity leads to higher levels of security, and such is the case with EDI. However, with modern technology it is also possible to send EDI by the way of email.

An EDI may also refer to a family of standards – some examples of this include UN/EDIFACT (which is the only international standard and is used predominantly outside of North America) and ANSI X12 (predominately used inside the Americas). Additional forms of EDI include TRADACOMS (most often used in the UK retail industry) and ODETTE, which is found most often in the European automotive industry. All of these standards were developed back in the 1980s and have been used ever since.

Each of these standards has certain EDI specifications and rules for what is a mandatory inclusion for that particular EDI and what is not.

The use of EDI helps a company operate with less risk when it comes to dealing with electronic commerce and its pitfalls. In the case of EDI, sometimes old technology still comes out on top due to its high level of security.