Learn in the textbookThe Foundations of Electronic Payment and Data Exchange
DefinitionEDI (Electronic Data Interchange) is a system in which companies exchange business data such as orders and invoices electronically, using a standard format agreed in advance.
ExplanationInstead of paper slips or faxes, the receiving system reads and processes the data produced by the sending system as it is. This cuts retyping and copying errors, and speeds up the paperwork from ordering through to invoicing.
AnalogyIt is like agreeing with a partner to use the same form layout, so any form that arrives can be fed straight into a machine for processing.
Memory hookShort for Electronic Data Interchange. "Interchange" means swapping back and forth, so picture the swapping of orders and invoices done as electronic data.