Businesses use Electronic Data Interchange (EDI) to exchange important documents, such as purchase orders and invoices, with trading partners. But everything needs to be fast, secure, and reliable, which is why companies rely on specific file transfer protocols.
One of the most common EDI protocols is Applicability Statement 2 (AS2). Compared to older file transfer methods, AS2 offers stronger security, faster delivery, and better tracking — because of this, it's often the preferred choice for businesses that handle extremely large volumes of data. Major retailers like Amazon and Walmart even require their suppliers to use EDI via AS2.
In this guide, we’ll explain what AS2 is, how it works, how it compares to other EDI connections, and the benefits and challenges of using it.
What Is EDI via AS2? Definition and Key Features
Applicability Statement 2 (AS2) is a B2B messaging protocol that securely transmits EDI data between trading partners. It encrypts files and uses digital certificates to protect transactions, wrapping each data exchange in a secure “envelope.”
AS2 is widely adopted across industries, including SaaS, logistics, and retail sectors, thanks to its security, speed, and reliability. Developed by the Internet Engineering Task Force (IETF) in the late 1990s, AS2 file transfers improved upon AS1, which relied on email for data exchange. With encryption and digital signatures, AS2 provides a safer and more reliable way for businesses to manage and share sensitive data.
How the AS2 Communication Protocol Works
Using AS2 is much like sending a traditional certified letter but in digital form. The AS2 protocol protects the information from tampering while en route and provides the sender with delivery confirmation when the data reaches its destination.
Here’s how the process works:
Document preparation: The sender prepares the document in a standard EDI format so that both the sender and receiver are able to process its contents correctly.
AS2 packaging: Before transmission, the document goes through three steps: compression to reduce file size and speed up transfer, encryption to protect sensitive data from unauthorized access, and digital signatures to verify that the message comes from a trusted source and hasn’t been altered.
Message transmission: The document is sent via a Hypertext Transfer Protocol Secure (HTTPS) connection. Again, unlike traditional email-based transfers (such as AS1), AS2 encrypts data while in transit and provides a delivery confirmation receipt, letting the sender know the document reached its destination safely.
AS2 unpackaging and verification:Once received, the document is decrypted and verified using the recipient’s private key. It’s important to note that the receiving system must be online to accept the incoming file. If the recipient’s system is offline, AS2 automatically sends an error message to the sender, notifying them that the file wasn’t delivered successfully.
EDI processing: After verification, the document enters the recipient’s EDI system for further processing. At this stage, businesses can review, store, or take action based on the information received, such as updating inventory, generating invoices, or processing shipments.
What Is the Difference Between EDI AS2 and SFTP?
When businesses need to send sensitive data, they usually use one of two options: AS2 or Secure File Transfer Protocol (SFTP). While both offer encryption and other security features, they're designed for different purposes. AS2 was built specifically for EDI, while SFTP is a general-purpose protocol used for transferring files between non-EDI systems.
Here’s a closer look at how AS2 and SFTP differ:
Security Features
AS2 and SFTP both protect sensitive data, but they do so in different ways. AS2 relies on digital certificates for authentication so that only verified trading partners can send and receive files. In contrast, SFTP uses passwords or public keys to authenticate users.
Encryption also works differently. AS2 encrypts individual documents before sending them, using AES (Advanced Encryption Standard) or Triple DES (Data Encryption Standard) to keep the contents secure. AES is a modern encryption method known for its speed and strong security, while Triple DES is an older but still widely used encryption technique. Conversely, SFTP encrypts the entire transfer process using SSH (Secure Shell), which creates a protected “tunnel” between the sender and receiver so that the file and the connection remain safe.
Data Integrity and Verification
One of AS2’s biggest advantages is its built-in verification system. Every file sent through AS2 is protected with Message Disposition Notifications (MDNs) and digital signatures, which confirm that the recipient successfully received the data and that nothing was altered. SFTP encrypts files to protect against tampering but lacks an automatic confirmation system, meaning the sender doesn’t get a receipt verifying that the file was delivered and processed.
Firewalls
Another major difference is how AS2 and SFTP handle firewall configurations. AS2 uses HTTP/S, which makes firewall setup simpler. SFTP, however, relies on SSH, which requires IT teams to configure specific firewall rules. While both methods are secure, AS2 offers a more straightforward setup for companies exchanging EDI documents over the internet.
Compliance
For industries that need to meet strict security and compliance regulations, AS2 is usually the better choice. Because AS2 includes MDNs and digital signatures, it meets the requirements of the Health Insurance Portability and Accountability Act (HIPAA) in the United States, the General Data Protection Regulation (GDPR) in the European Union, and other industry standards. SFTP is still a reliable option but does not provide the built-in tracking and verification needed for regulated industries like healthcare and retail.
4 Benefits of EDI via AS2
With so many options for exchanging data, why do companies choose AS2? Here are four key advantages that set AS2 apart:
Compliance with Industry Regulations
As mentioned, many industries, including healthcare, finance, and retail, require strict compliance with data security regulations like HIPAA and GDPR. AS2 includes built-in encryption, digital signatures, and MDNs so that transactions meet regulatory requirements automatically.
Eliminating Third-Party Costs
Before AS2, companies had to rely on value-added networks (VANs) to exchange data, which meant paying extra fees for a third party to manage transmissions. AS2 changed that. Because AS2 sends data directly over the internet, companies no longer have to depend on external providers. This reduces expenses while allowing businesses to maintain complete control of their transactions.
Standardized for Easy Integration
Since AS2 follows a standardized protocol, trading partners can easily exchange data, even if they use different internal systems. This broad compatibility is especially important in industries like retail and manufacturing, where large corporations often require suppliers to use AS2 because it facilitates secure and reliable communication across different platforms.
Built for Business Growth
With some older EDI systems, adding a new trading partner can require reconfiguring the entire system, making it difficult for businesses to expand. AS2, however, is designed to be flexible and allow companies to grow with ease, whether they work with a few trading partners or thousands.
Challenges and Solutions in Using AS2 for EDI
Setting up AS2 for EDI isn’t without its challenges, but the right solutions can make a big difference. Here are a few scenarios that businesses using AS2 run into — and how they address them.
Digital Certificate Renewals
AS2 requires businesses to exchange digital certificates that verify their identity and protect data transfers. But these certificates expire periodically and must be renewed, and they sometimes run into compatibility issues across different systems. If a certificate isn’t updated in time or is revoked, data transfers can fail, which disrupts operations.
To avoid this, many businesses automate certificate renewals so updates happen on time without manual effort. Setting up alerts also helps IT teams stay ahead of upcoming expirations and prevent unexpected downtime and other snags.
System Maintenance
AS2 systems need constant monitoring to keep everything running smoothly. This level of maintenance requires skilled IT staff, which can be costly. But without regular upkeep, companies risk security vulnerabilities, communication failures, or processing delays.
Some businesses outsource AS2 maintenance to third-party providers that offer 24/7 monitoring and technical support. Others invest in automated system monitoring, which scans for potential issues and alerts teams before problems arise.
Trading Partner Compliance
Every company that exchanges EDI data has different requirements, which can complicate AS2 integration. Some partners still use outdated systems that don’t support AS2, while others lack the technical knowledge to manage their connections properly.
To help keep data moving as smoothly as possible, businesses set clear, standardized protocols for all trading partners. Many also use compliance management software to monitor system compatibility and catch any potential issues early on.
Implementing AS2 Connections for Your Business
When setting up AS2, businesses typically choose from three options: on-premises installation, cloud-based solutions, or a managed service provider. Each option impacts security, scalability, and daily operations differently, so the right choice depends on factors like company size, available resources, and long-term goals.
On-Premises AS2 Installation
Some businesses host AS2 software on their own servers because it gives them full control of security settings and system configurations. This setup is especially common in industries with strict data localization laws, where compliance standards require companies to keep sensitive business information within their own infrastructure rather than with a third-party provider.
That said, managing AS2 in-house requires a dedicated IT staff to troubleshoot issues, perform system maintenance, and handle updates. It also involves a significant financial investment in hardware and licensing, and expanding the network — whether by adding new trading partners or increasing data volume — can be more complex than other AS2 options.
AS2 Service Providers
For companies without the IT staff to manage AS2 in-house, AS2 service providers handle everything, including initial setup, security configurations, and compliance checks. Most AS2 service providers also offer 24/7 support, real-time system monitoring, and automatic software updates so that everything always runs smoothly without any technical hiccups or security risks.
Cloud-Based AS2 Solutions
For many businesses, cloud-based AS2 solutions are a cost-effective alternative to on-premises installations. Since everything runs in the cloud, companies don’t have to invest in expensive hardware or maintain physical servers. Instead, they can integrate their AS2 with other business applications, such as enterprise resource planning (ERP) systems and supply chain management platforms.
One of the biggest benefits of cloud-based AS2 is that the service provider handles software updates, security patches, and system maintenance, freeing up IT teams to focus on other priorities. However, businesses using a cloud solution should always confirm that the provider meets compliance requirements like HIPAA, GDPR, or Service Organization Control (SOC) 2, especially if they handle sensitive data.
Take Advantage of EDI via AS2
Whether on-premise, cloud-based, or outsourced, the best AS2 implementation depends on your company’s size, resources, and long-term goals. For businesses looking to reduce in-house IT maintenance and upfront costs while staying flexible for future growth, a cloud-based AS2 solution may be just the right fit.
Interested in learning more about all the benefits that cloud-based AS2 EDI solutions have to offer? Connect with an EDI expert today to schedule a demo.