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Financial EDI

What is EDI (Electronic Data Interchange) ?

When using the generally accepted definition EDI means an electronic exchange of standardised structured messages that can be automatically processed by computer applications between different organisations using standard formats. EDI is becoming a standard tool for completing electronic business transactions and as such represents the most important technology within "e commerce". There are, of course, other methods of electronic communication, e.g. e-mail.

The basic feature of such a philosophy is the necessary formalisation of the exchanged data, which is ensured in practise by different standards and norms. Telecommuni┬Čcation services must be of a certain standard and acceptably priced for mass EDI use.

An agreement on the structure and manner of arrangement of the exchanged data is required for EDI. The agreement, usually bilateral at the beginning, reaches standard form during the process of being extended to more users. This successive development has brought group standards (SEDAS), industry standards (ODETTE, SWIFT), national standards (VDA), their combinations and also general international standards.

The international UN/EDIFACT standard (United Nations Electronic Data Interchange For Administration, Commerce and Transport) brought a basic quality change in comparison with restricted former industry or regional solutions and there is now world-wide uniformity and independence. The UN/EDIFACT standard is not only independent of the industry or field where it is being utilised but also independent of the computer and communica┬Čtion technology used. An ISO norm (ISO 7948) was introduced by the ITU-T organisation but it is better known as a set of recommendations X.400 (especially of X.435 and X.509) and further recommendations RFC 1006 (X.400 P1/P7 over TCP/IP).

The importance of the EDIFACT standard has been emphasised in recent times by the fact that all other standard- and norm-producing bodies have declared a gradual migration to EDIFACT messages (especially ODETTE and SWIFT).

What does Financial EDI (FEDI) mean?

More advanced EDI communities, e.g. the automotive industry, recognise that business has five cycles:

  • the order cycle,
  • the planning cycle,
  • the production cycle,
  • the distribution cycle - the physical flow of goods,
  • the settlement cycle - invoicing, payment and reconciliation.

FEDI is an instrument for the last one of these cycles, for settlement, in the narrower full construction of the word. We can, however, also look at FEDI from a wider financial logistics viewpoint, the objective of which is to make the proper amount of financial resources available in the right time and, of course, to the right business partner.

FEDI versus " Home-Banking"

Almost every commercial bank offers its clients an electronic document exchange, so called "Home-Banking". The diagram shows such a typical solution.

The basic feature of home banking is client's dependence on the bank as the client's application is closely bound up with the server application in the bank. The message formats and the communication protocols are proprietary. For a client who uses EDI for further activities or who uses the services of other banks this feature is very inconvenient and unproductive.

In contrast to the above arrangement FEDI makes the client independent of all a particular bank's arrangements and enables him to communicate with different banks using the same method. The strategic advantages of FEDI include:

  • the extension of service offered by increasing the level of in-time and detailed information (the basis for offering attractive new services),
  • a payer can generate payments from his in-house system in the same manner for all banks,
  • an easier way of finding and storing data,
  • an easier way of coupling payments and settling claims among business partners,
  • reductions in operating expenses,
  • a competitive advantage in the banking sector and a┬áway of bank differentiation from the┬áclient's point of view,
  • partners are not too dependent on each other as open standards are used,
  • better managerial information and
  • an increased security level.

A schematic presentation of a FEDI system is shown in the next diagram. We can say that, from the functional point of view, both methods of electronic document exchange are principally equivalent (a slightly modified home-banking server is often used). FEDI's advantage is absolutely indisputable if the bank client uses EDI tools for other business processes.


Bank Message Standards

TELEDIN, in co-operation with ┼ákoda Auto, Commerzbank AG, Komer─Źn├ş banka and HVB Bank, has designed EDIFACT subsets of the following bank messages:

  • PAYMUL - a multiple payment order for local payments,
  • PAYMUL - a multiple payment order for payments abroad,
  • FINSTA - a statement of account,
  • DEBMUL - multiple foreign currency debit advice,
  • CREMUL - multiple foreign currency credit advice,
  • DIRDEB - local payment multiple direct debit order,
  • BANSTA - a report of the processing status from the bank.

The goal of this project was to create a standard national subset of these messages. This means creating a rule for assigning information systems' data items to the items of the relevant EDIFACT structures in a manner which can be accepted and used by most other organisations in the Czech Republic.

The created subsets have been released by the Czech Normalisation Institute and as the approved standards.

Teledin has also released an integrated "in-house" structure of the messages for all the partners; this structure appears at the output of the converter (or the input if travelling in the opposite direction). This structure can easily be accepted by a partner's application or a specific proprietary DAM module (Data Acquisition Module) has to be designed to convert the in-house structure into a specific appropriate structure to be worked out by the corresponding application.

The following subsets of messages have been prepared:

  • APERAK - notification on error status,
  • FINCAN - the cancellation (recall) of a┬ábank message
  • REQDOC - a request for the confirmation of a transaction,
  • FINSTA - momentary account status,

and further bulletin messages of an information kind (e.g. exchange rate tables, payment titles, constant symbols, country codes, etc.), anyway, the condition of using of them is the (in)ability of banking systems to work it up.

The importance and possible use of service messages will be multiplied by the implementation of the COBS system. Finalising the related messages depends upon customers' needs and priorities.

Implementing a FEDI Server in a Bank

We can assume that banks already have EDI servers installed and running, as they need them for communica┬Čtions with the Czech National Bank.

To achieve a highly secure communication between a bank and the client can be realised by the ISO protocol P1 of the CZ Mail service. We can recommend the use of the ADMD service of it, which does net4net provide, but Teledin support it directly. For the connection to this operator, or directly to Teledin, you can choose any of the following communication stacks - X.25, a dial-up line, TCP/IP on a leased line or ISDN (Integrated Services Digital Network). The Service CCF of Teledin can be used even more broadly. e.g. also for the conversion from/to inhouse formats to the corresponding EDIFACT formats, and also for archiving purposes.

The secure FEDI

The security principles of the COBS project are based on the correct method of securing EDIFACT messages, which was introduced by the Czech National Bank for the banking sector within the field of electronic exchange of accounting and statistic statements. The basic respective norms are the recommendations UN/EDIFACT UN/TRADE WP.4/R.1026 and the ISO norm ISO/CD 9735.

The basic security function is the generation of an electro┬Čnic signature for the relevant EDIFACT message using the prescribed algorithms and the inclusion of a secure segment within the signature. It should be stressed that the automatic secure transfer of EDIFACT messages between two EDI servers is being designed and will meet security requirements. Putting any equipment, even equipment manned by an operator, between two EDI servers is inappropriate and regrettable, as the main principle of an EDI solution (i.e. automatic operation without an operator) would be compromised. Our approach to the secure EDI solution retains this principle and we have solved the problem of the process of creating and placing the electronic signature in the EDIFACT message by adding further modules between particular phases of the EDI system. The COBS managerial system integrates all monitoring and error information processing.

Implementing a FEDI Server in Companies

Teledin has prepared two solutions (products) for the placement of a FEDI server in companies.

The Standard EDI Server

We can recommend the implementation of an open general and modular EDI solution, which is useful and efficient for all types of business processes in large companies. This EDI server enables not only different subsets of EDIFACT messages but also messages in other formats (e.g. ODETTE messages, etc.) to be processed and transferred using different communications protocols.

There are three basic components in an general EDI server:

  • converter which transforms the in-house data structure to the EDIFACT message subset;
  • EDI Access Unit (AU) which takes over standard EDIFACT messages and works out messages from them using the Pedi protocol;
  • MTA which is the Message Transfer Agent that sends the messages using the ISO P1 protocol.

The offered solution is the integration of Teledin product in combination with WRDCLogsys products. The converter, together with the corresponding modules, works as a compiler and can be used on any data structures.


The EDI*BANK product for Windows covers all basic run-time features, as the standard EDI server above, and it is an easy application for working out of the established subsets of EDI bank messages.

The product can be optionally extended by a user interface, which enables received messages to be shown manually and data to be inserted into the messages before sending.

Electronic signature

A security module is an integral part of both products. It makes messages secure by generating an electronic signature and it can also encrypt the message and prepare the EDIFACT CIPHER message. All security modules have been designed in accordance with X.509 standards and their implementation is represented by the CSAPI? library from Concord-Eracom or Security Networks. This library has been certified and chosen by the Czech National Bank and practically all commercial banks as the basic security product for electronic banking.

Notification and Error Messages

Monitoring message travel within the EDI exchange is a relatively complicated matter. For example, the converter takes over a payment order generated by the relevant application in the in-house format. The converter converts the structure to that of an EDIFACT message and in the final phase hands this message over to the Access Unit, which sends the message to the bank if the converter's instructions are positive. If the opposite is true the Access Unit generates a report (Access Unit Report - AUR) with the relevant error code. The Access Unit in the bank acknowledges the acceptance of the payment order (Delivery Report - DR) or non-acceptance of it (Non-Delivery Report - NDR).

If the report is positive the payment order message is taken over by the converter, which, in the final phase, generates a conversion notification. This notification can be either positive (Positive Notification - PN) or negative (Negative Notification - NN). The reports, error messages and notifications are sent to the client who sent the order (the Originator). If there is a positive end-result, i.e. the payment order is accepted by the relevant banking application, the standard EDIFACT BANSTA message will be generated and sent to the client (Originator).

The COBS system

The COBS system is a comprehensive and integrated system based on the collection and correct presentation of information concerning the processing and working out of particular EDIFACT messages. The system also offers the opportunity of passing this information directly to a connected destination application.

The COBS system has created a comprehensive framework, which can easily be extended to process other types of EDIFACT messages, reports and notifications from various applications, including monitoring and evaluating of security functions.

When delivering the standard EDI server the COBS system can also be delivered as an optional superstructure which is additionally equipped with additional modules for the on-line monitoring of particular messages and their processing statuses. It is a monitoring and a signalling module.

As a further optional extra we offer a special COBW scanning program for Windows, which can browse information on message statuses depending on the criteria set. The target person for this program is the administrator of the EDI system.

Service CCF

CCF manages the conversion among different data formats (EDIFACT, XML, IDoc, customer defined inhouse, etc.).

It is not necessary to invest money into your own EDI conversion system. You can thus save a lot of investment. One customer can therefore quickly communicate with their many business partners who run different communication systems and make this without defining of special rules for any of them as they used to be necessary to set up formerly and through only one communication channel without any other additional investment.

CCF is operating a VAN system like and can keep a parallel connection with other network points. Thus, the client of CCF can obtain the added value by the simplification of the access point which is only that one. CCF will take over the responsibility of the messages delivery both on the appropriate quality level and in time.

Offered services:

  • Virtual Mailbox ÔÇô a virtual space for CCF clients enabling the access to all of the services including conversion, archiving and notification.
  • AlertCCF ÔÇô services for alerting or warning of all the pre-defined situations during the business exchanges. Alerts can be SMS or email routed.
  • MobilCCF ÔÇô a receiving SMS performing service, their validation, conversion into the addressee's inhouse format and sending. The validation consists of checking of both the number of the sender and the PIN code.
  • WebCCF ÔÇô Web interface of CCF services, the content browser of virtual mailbox, generation of new messages/answers, imports/exports from/to internal systems, setting up of CCF services, a backup system for VANCCF users.
  • EmailCCF ÔÇô a client-to-CCF communication based on email protocols ÔÇô POP/SMTP. CCF allows receiving of messages in an email, also sending them to email addresses. In addition, the email notifications option is also available.
  • VANCCF ÔÇô the VAN operator main and basic function. VANCCF service consists of all classic services of VANs ÔÇô transfer of a message into the recipientÔÇÖs mailbox, even if in other VAN systems ÔÇô EDIVAN or EDINET. VANCCF also offers the interconnectivity with foreign VAN systems as AT&T, GXS, DINET, Azertia etc. The clients can reach VANCCF through various channels: PSTN dial up, ISDN, FTP, FTPs, HTTP, HTTPs, OFTP, X.400 via TCP/IP or X.25, or VPN.
  • ForkCCF ÔÇô ForkCCF ÔÇô this service enables the simple sending of one message to more recipients. Each of them can communicate on different rules ÔÇô i.e. the first one is an EDI mailbox partner, the second one an email partner, etc.
  • KonvertCCF ÔÇô it represents outsourcing of the conversion services to CCF. The customer does not need any own EDI converter due to renting of such converting service in CCF.
  • CACCF ÔÇô this is a service of a Certification Authority kind and security services. The CCF services will be extended by services of the encryption and the certification. These service validate the incorruptness of messages and the originator's authenticity. Service CACCF enables using of official security certificates or internally generated electronic keys for the secure communication between two business partners.

Use of FEDI by Bank Clients

It is quite clear that implementing FEDI products, integrating them with a company's information system and exploiting FEDI depends on the ability and preparedness of banks to offer such services.

In conclusion we would again to stress that the use of standard EDI tools makes a company independent (as regards electronic data exchange) of any one bank as the company can communicate with all banks in the same manner.




Teledin s. r. o.

V Parku 2294/2,
148 00 Praha 4

Tel. +420 261 009 068