--- title: "What Is EDI (Electronic Data Interchange)?" url: https://www.uncap.com/glossary/edi author: "Denis Dyli" published: 2026-10-11 updated: 2026-10-11 summary: "EDI (electronic data interchange) is the computer-to-computer exchange of strictly formatted business documents, such as purchase orders, ship notices and invoices, between two trading partners. The receiving computer usually processes each message with no human intervention. Standard families include X12, maintained by an ANSI-accredited non-profit, and UN/EDIFACT." --- # What Is EDI (Electronic Data Interchange)? > EDI (electronic data interchange) is the computer-to-computer exchange of strictly formatted business documents, such as purchase orders, ship notices and invoices, between two trading partners. The receiving computer usually processes each message with no human intervention. Standard families include X12, maintained by an ANSI-accredited non-profit, and UN/EDIFACT. **EDI (electronic data interchange)**: EDI (electronic data interchange) is the computer-to-computer exchange of strictly formatted business documents, such as purchase orders, ship notices and invoices, between two trading partners. The receiving computer usually processes each message with no human intervention. Standard families include X12, maintained by an ANSI-accredited non-profit, and UN/EDIFACT. ## How it works In X12, each business document is a transaction set, identified by a number and a name. X12 says more than 320 transaction standards cover order placement and processing, shipping and receiving information, invoicing, payment and cash application data. Five that appear in X12's supply chain flow: - 850 Purchase Order: the buyer places the order. - 855 Purchase Order Acknowledgment: the seller affirms the order or flags changes. - 856 Ship Notice/Manifest: the seller describes what is being shipped. - 810 Invoice: the seller bills for the goods. - 997 Functional Acknowledgment: the receiver confirms a document arrived and can be used. Received messages are usually processed by computer only. People step in for error conditions, quality review and special situations. EDI is often thought of as a batch process, but X12 notes that it also accommodates real-time processing. X12 publishes its EDI Standard once a year, in January. ## EDI standards EDI needs a family of related standards. At minimum they cover the syntax that composes a message and separates its parts, the data elements, the message types, and the control data in message headers and trailers. Major families include: - X12: chartered by the American National Standards Institute. X12 lists supply chain, transportation, government, finance and health care among the industries using it. - UN/EDIFACT: UN Electronic Data Interchange for Administration, Commerce and Transport, developed under the UN Economic Commission for Europe. - GS1 EDI: global standards from GS1 for electronic business messaging that allow automation of business transactions across the supply chain. - HL7: a healthcare data standard, used for patient records and clinical data. A standard is like a building code. Two documents can follow the same standard and still carry different information, so trading partners agree in written specifications, also called message implementation guidelines, on what they will send and how it should be used. ## How EDI documents travel Trading partners can connect directly or go through a value-added network (VAN), which receives each transaction, reads the from and to information and routes it to the recipient. On the internet, AS2 is an IETF standards track protocol for exchanging X12, UN/EDIFACT, XML or other structured business data securely over HTTP. On receipt, the receiver confirms. A [997 functional acknowledgment](/glossary/edi-997) confirms receipt of the transaction and its usability to the receiver, and AS2 provides authenticated acknowledgments through Message Disposition Notification (MDN) responses. ## Example A distributor's system sends an 850 for 200 units at $5.00 each, a $1,000 order. The supplier's system answers with a 997 to confirm receipt, then an 855 to accept the order. When the goods ship, the supplier sends an 856 describing the shipment. Next comes an 810 invoice for $1,000 that references the purchase order. The distributor's system checks the invoice against its open order and schedules payment on the agreed terms. ## On Shopify To use Shopify B2B, merchants set up B2B customers as companies. Each company location can have separate catalogs and payment terms, and customers have the option to enter a purchase order number at checkout. An integration that receives an 850 can create the matching Shopify order through the Admin API, where the orderCreate mutation covers orders that aren't created through the standard checkout, such as orders imported from an external system. ## How Uncap helps Uncap's [Shopify EDI integration guide](/post/shopify-edi-integration) explains that for wholesale operations, integration design starts with all three systems mapped together before a single document transmits: the EDI network, Shopify, and the ERP. ## Related terms - EDI 850 - EDI 856 - cXML - Purchase order - Middleware - ERP integration ## Sources - X12 Transaction Sets - X12 Supply Chain Transaction Flow - Federal Register: FIPS PUB 161-2, Electronic Data Interchange (NIST, 1996) ## Frequently asked questions ### What are EDI transactions? They are standardized business documents. In X12, each one is a transaction set identified by a number and a name, such as the 850 Purchase Order or the 810 Invoice. ### What is an EDI example? A buyer's system sends an X12 850 purchase order. The seller's system reads it, returns a 997 to confirm receipt, and sends an 855 to acknowledge the order.