Electronic Data Interchange (EDI) is an electronic communication system that provides standards for exchanging data via any electronic means. It is used to transfer structured data from one computer application to another, either within a single organization or among multiple organizations. The data exchanged are typically business documents such as invoices, purchase orders, and shipping notifications, allowing companies to streamline their operations and reduce paper-based transactions. EDI enables more efficient processes, reduces transaction costs, and helps eliminate errors.