EFT vs EDI: Difference and Comparison

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, it is increasing the role of the internet in people’s daily lives.

Key Takeaways

  1. EFT (Electronic Funds Transfer) is the electronic transfer of money between bank accounts; EDI (Electronic Data Interchange) is the electronic exchange of structured business information between organizations.
  2. EFT focuses on financial transactions, while EDI is concerned with various business documents, such as purchase orders, invoices, and shipping notices.
  3. Both EFT and EDI improve efficiency and reduce errors in transactions and communication, but EFT is specific to financial transfers, while EDI covers a broader range of business data exchange.


The difference between EFT and EDI is that the former revolves around the transfer of funds electronically. At the same time, the latter refers to electronically exchanging business documents or information, commonly invoices of goods or services.

EFT vs EDI 1

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

In the case of Electronic Data Interchange, 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 for goods, 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

Parameter of ComparisonEFTEDI
MeaningAn electronic funds transfer is the transfer or exchange of 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 automatic application control.
SynchronizationThe application through which the money has to be transferred or is transferred does not necessarily have to be in sync.In the case of electronic data interchange, the application has to update/be in sync continuously.


What is EFT?

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

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

Different names in different countries know EFT transactions; 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 essential role in the lives of today’s people:

  1. It helps individuals and organisations save costs such as printing cheques and time consumed by delivering and collecting cheques and depositing them in the banks for further process.
  2. The money moves to the recipient’s account much faster than the manual movement of cheques from one bank to another.
  3. EFT is more efficient.
  4. It has fewer procedures and helps organizations save labour costs.
  5. EFT is much safer and more secure than carrying a significant amount in a suitcase or the manual movements of a significant sum of money.
electronic fund transfer

What is EDI?

Electronic Data Interchange (EDI) is exchanging business information between companies over the internet. It replaces postal mail, fax as well as e-mail.

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

The most common documents 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 and understand the documents. A standard format describes each piece of information and in which format, for example, integer or decimal.

It has become essential to international business because of its speedy data exchange process. In the information age we live in, these small portions of time saved mean thousands of rupees.

electronic data interchange

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. At the same time, the EDI (Electronic Data Interchange) is the exchange of business documents or information through the internet with a standard format that the computer system can read.
  2. Advantages: The EFT, as well as EDI, plays a vital role in today’s world. Where the former provides an easy, fast, and most importantly, safe payment method, the latter, EDI, caters for an automatic way of sending and receiving business documents and information over the internet in a faster and more secure manner without 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, and users will not receive a copy of the cancelled cheque; it creates purchasing opportunities available around the clock, and there are chances that the payments may bounce. On the other hand, EDI also has a few disadvantages, i.e., the initial setup is time-consuming; the EDI standard might change, limiting your trading partners; a proper backup should always be maintained, and staff training costs.
  4. Synchronization: In the case of EFT, there is no need for the application to be in sync to work correctly and effectively, but on the other hand, in EDI, there is a constant need for the application to be 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 manual payment release, i.e., human intervention. Whereas, in the case of EDI, the transfer of information between businesses is automatically done through the computer system without human interference, saving time.
Difference Between X and Y 2023 04 06T083257.219
  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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Last Updated : 20 April, 2024

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