Beginning this fall, the Federal Reserve will distribute, at no additional cost, new software that will allow the 12,000 Fedline® users to receive financial Electronic Data Interchange (EDI) information. The software will be known as FEDEDI and will allow institutions to translate the payment-related information contained in ACH addenda records in a standardized computer-readable format.
The Fed's action is in response to the government's Electronic Funds Transfer initiative (EFT 99) that most government payments be made electronically by Jan. 1, 1999. In addition, the National Automated Clearing House Association (NACHA) mandated that by fall 1998, all ACH-receiving institutions be capable of sending payment related information attached to corporate ACH items to receivers at the receivers' request.
Like EDI, financial EDI is used to replace traditional paper documents. But financial EDI incorporates the electronic transfer of funds, as well. To complete this transfer, financial institutions typically utilize the ACH network. When the federal government begins using financial EDI for its payments, businesses of all sizes will be looking to their financial institutions for assistance in translating payment-related information to human-readable form and forwarding it to them either on paper or electronically.
FEDEDI will enable institutions to provide their customers with essential payment information, such as invoice numbers, purchase order numbers, payment amounts, etc. The software can be used through Fedline or through any electronic connection with the Fed and will be available in DOS and Windows 95/NT® platforms.
The use of financial EDI is expected to increase dramatically in the next few years, so it is important for financial institutions to be prepared. The Fed will be providing more information in the coming months about FEDEDI, including information on software training in September and October.