Electronic Data Interchange (EDI) is an emerging type of standardized inter-organizational information system.EDI encourages long-term commitment with trading partners, makes the transmission of information more efficient, and allows firms to be more responsive to customer needs through shorter order cycles. The electronic data interchange technology allows to do the simultaneously reducing costs by reducing paper, mail expense, and delays due to data entry errors.The objective of this study is to make Electronic Data Interchange secure to use and to eliminate human intervention in the transfer of data between business partners so that productivity and efficiency can be improved and also promote its usage between two or more trading organizations. This provides an overview of EDI by describing the traditional problems of exchanging information in business environments and how the EDI solves those problems and gives benefits to the company that makes use of EDI. This also introduces the common EDI Standards and explains how it works, how it is used over the internet. The comparison of paper and EDI document is also visualized. It explains about the benefits and disadvantages encountered with the system. This also provides information about the Security system for electronic data interchange.