(Financial EDI) FEDI eliminates the need for paper-based transactions, streamlining communication between businesses and banks. It does this by providing a standardized format for financial data that is understood by software systems within financial institutions. Adopting the FEDI standard allows organizations to automate secure data exchange through software rather than relying on manual processes like email or fax.
Before FEDI, people made direct deposits of cash or checks in person (at a bank or an ATM), or asked an institution that owed them money, to mail a check to their bank. However, ATMs are physically insecure. FEDI solves this by prearranging electronic deposits with addenda.
Paying with a credit card eliminates the need for cash or checks but comes with security risks like theft and fraud. Newer FEDI technologies enhance security by allowing credit card details to be stored in electronic wallets for in-store payments and enabling bill payments through home banking. Additionally, alias numbers linked to specific sellers help reduce identity theft.
Peer-to-peer payments can be made via bank transfers or wire services like Western Union, but they are slow and costly. Peer-to-peer apps offer a faster, low-cost alternative, enabling instant electronic payments.
