The number of financial electronic data interchange, or EDI, transactions increased 22.5% in 1999, to 79 million, according to the National Automated Clearing House Association.
The growth came even as other communications standards have begun taking hold. For example, eXtensible Markup Language, or XML, which was designed expressly for the Internet, has been dubbed the "new EDI" by many technologists. EDI is a standard for exchanging purchase-related documents, such as orders or invoices. It was designed more than 20 years ago to handle electronic transactions between mainframe computers, but some companies have moved payment operations to the Internet.
Financial EDI includes the related payments. Corporate trade exchange payments, a type of financial EDI that pays multiple invoices with one transaction, increased 45% last year, to 14.3 million transactions, according to Nacha.
Government agencies "had an influence" in driving financial EDI growth, said Elliott C. McEntee, president and chief executive officer of Herndon, Va.-based Nacha. Though Congress watered down much of its EFT '99 mandate that was intended to encourage the use of electronic payment transactions, the agencies still are promoting financial EDI, forcing many vendors and their banks to accept it in lieu of checks.
The government, which disbursed 58% of its vendor payments electronically at the end of 1999, accounted for 15% of EDI volume, or 12.1 million transactions. Its use of the more complex corporate trade exchanges, called CTX, rose 50%, to 3 million.
Such government efforts are helping to break resistance among banks and corporations to using financial EDI, said Robert Frank, president of Open Commerce Inc., an electronic commerce consulting firm based in San Ramon, Calif. As many banks and corporations are forced to invest in EDI processing technology, they use it increasingly for nongovernmental electronic payments as well, he said.
"It sounds like banks are starting to get serious about EDI," Mr. Frank said.
XML is the next generation of business-to-business communications technology.
Despite the advance of XML, Mr. Frank said, he expects EDI volume to continue rising because EDI works with existing mainframes, which will not be scrapped anytime soon. Companies will need not only XML for Web-based payment initiatives but also EDI as a bridge to legacy mainframes, he said.
"It is not an issue of one or the other," Mr. Frank said. "You have to have both. I am sorry, but the world is more complex today than it was 10 years ago."