Electronic Funds Transfers (EFTs) refers to the computer-based systems used to perform financial transactions electronically. It has been used by banks for many years.
Electronic Data Interchange (EDI) occurs when one business transmits computer-readable data in a standard format to another business.
EDI refers to the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another, i.e. from one trading partner to another trading partner.
Businesses who engage in EDI with each other are called trading partners.
Firms, such as General Electric and Wal-Mart, have been pioneers in using EDI to improve their purchasing process.