Businesses rely on data to manage inventory, suppliers, and shipments, but not all platforms process it the same way. Some use spreadsheets, others databases or web tools. When these systems don’t connect, mistakes can happen — orders go missing, deliveries are late, and employees waste time fixing errors.
Data interchange formats (DIFs), including Electronic Data Interchange (EDI), solve this by standardizing data exchange. They keep inventory, supplier, warehouse, and shipping data accurate and aligned, reducing errors and manual work.
In this guide, we'll explain how data interchange formats work, what a DIF file is, and the most common types of DIFs.
What Is Data Interchange Format (DIF)?
The term “data interchange format” refers to the standardized way that computer systems share information. Platforms often store and process data differently, which can lead to errors, misinterpretations, or even data loss when transferring information between systems. Without a common format, one system might save data in a way another can’t recognize, and that can cause delays and require timely manual corrections. DIF prevents these issues by structuring data in a format all systems can process before it’s sent.
What Is a DIF File?
A DIF file is a plain text format that stores tabular data, meaning information is arranged in rows and columns like a spreadsheet. This structured format makes it easy to transfer data between systems while preserving accuracy.
DIF files act as templates, helping prevent errors and formatting issues when data moves from one party to another.
Software Arts developed DIF technology in the late 1970s, and it later became a core feature of VisiCalc, the first spreadsheet program for personal computers. Today, DIF files remain widely used across industries that rely on structured data exchange, including finance, healthcare, engineering, retail, and manufacturing. Businesses use them for tasks like transferring financial statements and patient records, maintaining design calculations, and tracking inventory.
While newer formats like JSON and XML can handle both tabular and more complex data structures, DIF files are still in use thanks to their simplicity, reliability, and compatibility with spreadsheet-based systems.
How Data Interchange Format Works
DIFs follow a structured set of principles so that information is correct, organized, and compatible when moving across platforms, including:
Serialization formats data so that the receiving system can process it correctly. This step keeps structured information — like spreadsheets or databases — intact as it moves between platforms.
Standardized syntax ensures consistency across different types of DIFs. Whether CSV, JSON, XML, or YAML (more on those below), each follows specific rules for labeling, arranging, and separating data, allowing different systems to interpret it without any issues.
Metadata inclusion adds extra details, such as headers or labels, to help receiving systems understand the data.
Platform independence allows DIFs to function across different software and hardware, making data exchange easier without compatibility concerns.
Encoding and parsing prepare data for transmission by converting it into a machine-readable format. Once received, the system decodes and reconstructs it into its original structure.
Data interchange formats also use a structured process for sending and receiving data across systems:
1. Organizing the Data
First, the sending system arranges the data into a format that makes sense for both the sender and the receiver. Tabular DIFs like CSV and DIF files store information in columns and rows, similar to a spreadsheet. Hierarchical DIFs, such as JSON and XML, structure data using key-value pairs, making it easier to manage complex relationships between different data points.
2. Encoding for Transmission
Before sending data, the system converts it into a structured format using either text-based or binary encoding. Text encoding keeps the data readable, while binary encoding compresses it for faster transmission.
3. Sending the Data
After formatting, the data moves to its destination using a communication protocol such as an API, HTTP, or FTP. Each method serves a different purpose — APIs handle real-time data exchange, HTTP supports web-based transfers, and FTP is best for moving large files.
4. Reconstructing the Data
Once the data arrives, the receiving system decodes it and restores its original structure. Metadata in the DIF guides this process so that everything is reassembled correctly.
5. Checking for Accuracy
Finally, the receiving system validates the data to confirm it follows the expected structure. This prevents errors and verifies that the information is compatible with the receiving system before it processes it.
4 Common Types of Data Interchange Formats
Different formats serve different purposes depending on how the data needs to be structured, stored, and shared. Below are four of the most common types of DIF:
CSV (Comma-Separated Values)
CSV is one of the simplest ways to store and exchange structured data. That makes it one of the most popular DIFs, too. In a CSV file, data is arranged in a table-like format, with commas separating each value. CSV files are plain text, which means they can be opened in almost any program — Excel, Google Sheets, or even Notepad. Thanks to this simplicity, businesses often use CSV files to transfer data between different platforms, whether exporting sales reports, organizing inventory lists, or managing customer databases.
JSON (JavaScript Object Notation)
JSON is often the go-to data interchange format for organizing and sharing data online. It structures information using key-value pairs, which makes it both easy for humans and machines to read. Web applications, social media platforms, and online banking systems all use JSON to transfer data between servers and users in real time. For example, when you check your weather app, JSON is likely at work — retrieving information like temperature, air quality, and forecast data from a server and displaying it on your screen.
XML (Extensible Markup Language)
XML has been around since the late 1990s, but it's still an important format for industries where keeping detailed records is a must. Unlike JSON, XML relies on user-defined tags enclosed in angle brackets (< >) to structure information. Many banks, insurance companies, and healthcare providers use XML because it provides a clear, structured way to store data, whether it’s medical records, loan applications, or financial statements.
YAML (YAML Ain’t Markup Language)
YAML was designed to be, first and foremost, human-friendly. Unlike XML and JSON, YAML doesn’t use brackets or quotation marks, which makes it much easier for humans to read and edit. Because of this, developers and IT teams often use YAML to define cloud infrastructure, automate workflows, and configure software applications.
From DIF to EDI: Automating the Next Step in Data Exchange
DIFs allow data to be readable by whatever system is on the other end of the line, but Electronic Data Interchange (EDI) actually delivers it. With EDI, businesses no longer have to manually enter orders, invoices, or shipment details — everything moves automatically and instantly, minimizing errors and downtime and maximizing your team's productivity.
Ready to learn more about what a cloud-based Electronic Data Interchange solution can do for you? Connect with an EDI expert today to get started.