Difference Between EFT and EDI

Rapid growth is on the horizon of the world’s e-commerce market. From the basic level of the internet to innovation in its online payment methods, increasing the role of the internet in people’s lives day-by-day. Electronic Funds Transfer (EFT) and Electronic Data Interchange (EDI), are both related to online payment in one way or another.


The main difference between EFT and EDI is where the former revolves around the transfer of funds electronically, the latter refers to the exchange of business documents or information, commonly invoice of the goods or services, electronically.


Electronic Funds Transfer (EFT), refers to transferring money electronically. It has made life easy and safe, it proves to be a cheaper as well as faster method of transferring funds/ money as compared to the exchange of physical money.

In the case of Electronic Data Interchange, it is the computer to computer exchange of business documents or information in a standard format between businesses that can be read and understood by the computer system.

It helps to streamline the process of ordering and paying of goods and is beneficial to the companies in reducing the costs associated with invoices and offers a high level of coordination and control over the shipment of goods.


Comparison Table Between EFT and EDI (in Tabular Form)

Parameter of ComparisonEFTEDI
MeaningElectronic funds transfer is the transfer or exchange of the funds via the internet.Electronic data interchange is the exchange of business information over the internet.
ServerElectronic funds transfer has a non-reusable technology/server.Whereas, Electronic data interchange has a reusable technology/server.
AuditElectronic funds transfer has a dual system audit.Electronic data interchange, has a single system audit.
ControlElectronic funds are transferred only through manual release.Whereas, in electronic data, the data is exchanged through an automatic control of the application.
SynchronizationThe application through which the money has to be transferred or is transferred does not have to necessarily in-sync.In the case of electronic data interchange, the application has to continuously update/ in-sync.


What is EFT?

Electronic Funds Transfer (EFT), revolves around the exchange or transfer of funds electronically i.e. over the internet without the physical exchange of money. The EFT has proved to be of great importance due to its easy-to-use, safe, cheap, and fast method of exchange.

The process allows its customers to send money or transfer funds between accounts with the same bank as well as with different banks/financial institutions.

EFT transactions are known by different names in different countries, for example, in the United States, they are referred to as “Electronic checks” or “E-checks”, while in several other European countries EFT is known as “Giro Transfer”.

EFT plays an important role in the lives of today’s people:

  1. It helps individuals as well as organizations to save costs such as on printing cheques and to save time which is generally consumed by delivering and collecting cheques and depositing them in the banks for further process.
  2. The money moves to the recipient’s account in a much faster way as compared to the manual movement of cheques from one bank to another.
  3. EFT is more efficient.
  4. It has fewer procedures and helps organizations to save labor costs.
  5. EFT is a much safer and secure method as compared to carrying a big amount in a suitcase or the manual movements of a big sum of money.

What is EDI?

Electronic Data Interchange (EDI), is the exchange of business information between companies over the internet. It replaces the postal mail, fax as well as e-mail. While mail is also an electronic method of exchanging documents but it is handled by people rather than computers, which is not the case with electronic data interchange. In the case of EDI, the information flows straight through a standard format to the recipient’s computer.

Any type of business document or information can be exchanged through EDI via the internet.

The most common documents that are exchanged through electronic data interchange are purchase invoices, purchase orders, and advance ship invoices.

As EDI is handled by computers instead of people, a standard format is followed so that computers can read as well as understand the documents. A standard format describes what each piece of information is and in which format, for example, integer, decimal. EDI has allowed the businesses to not only automatically upload the information in their customer’s system but also allows the information to be sent within their systems.

It has become an important part of the international business because of its speedy process in the exchange of data. In the information age that we live in, these small portions of time saved means thousands of rupees saved.

Main Differences Between EFT and EDI

  1. Meaning: EFT ( Electronic Funds Transfer) refers to the transfer of funds such as making payments, accepting payments, running errands, purchasing goods or services, etc. over the internet, i.e. electronically without the interference of any physical exchange of money or through postal cheques. Whereas, the EDI (Electronic Data Interchange) is the exchange of business documents or information through the internet with a standard format that can be read by the computer system.
  2. Advantages: The EFT as well as EDI plays an important role in today’s world. Where, former provides an easy, fast, and most importantly safe payment method, the latter, EDI caters an automatic way of sending and receiving business documents and information over the internet in a faster and secure manner without the human interference which in turn saves time.
  3. Disadvantages:  Where EFT has several advantages, it holds some disadvantages as well. In EFT, the customers need to have the funds available at the time of transfer of funds, users will not receive a copy of the canceled cheque, it creates the purchasing opportunities available around the clock, there are chances that the payments may bounce. On the other hand, EDI also has few disadvantages i.e. it is expensive, the initial setup is time-consuming, The EDI standard might change, limit your trading partners, a proper backup should be maintained at all times, staff training costs.
  4. Synchronization: In the case of EFT, there is no need for the application of being in sync to work properly and effectively but on the other hand, in EDI there is a constant need for the application being in sync with the information i.e. it should be up-to-minute.
  5. Control: In EFT, the exchange of funds or payments is made only through the manual release of payment i.e. only through human intervention. Whereas, in the case of EDI, the transfer of information between businesses is automatically done through the computer system without any human interference, which saves time.



In today’s information age that we live in, we cannot think of shopping online and paying through postal cheques, this is where the online payment methods play an important role.

As E-commerce is taking over the business world, it is indeed making our lives easy and simple with security as its priority. EFT as well as EDI, plays an important role in today’s business world and has indeed made lives easy and simple.

Where the former provides an easy, safe, faster and cheaper way of transferring funds, the latter revolves around the exchange of business information through the internet and both are very important for any business whose objective is to run a business smoothly and effectively while providing safe and easy methods of running regular errands.


  1. https://go.gale.com/ps/i.do?id=GALE%7CA19146080&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=07350732&p=AONE&sw=w
  2. https://www.inderscienceonline.com/doi/abs/10.1504/IJCAT.1992.062587

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Editorial Staff at Ask Any Difference is a team of experts in the field of "Difference Between" topics and led by Sandeep Bhandari, Piyush Yadav and Chara Yadav. Trusted by over 1.5 million readers worldwide
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