What Is MFT (Managed File Transfer)? Definition, Benefits, and Best Practices

Managed file transfer, or MFT, provides a secure, automated way to move data between systems, people, and partners. It ensures files are transferred safely, accurately, and in compliance with security standards.

For organizations that handle large volumes of data or sensitive information, MFT is an essential part of modern digital operations.

What Is MFT?

Managed file transfer (MFT) is a technology that securely transfers files within an organization and between trading partners. It automates file sharing while providing full visibility, auditability, and control over data movement.

Unlike basic file transfer tools, MFT solutions include encryption, authentication, and real-time monitoring. They ensure data stays protected both in motion and at rest, helping businesses meet compliance standards such as HIPAA, SOX, and GDPR.

MFT can be used on its own or alongside electronic data interchange (EDI) tools to transmit structured business documents like purchase orders or invoices.

How Is MFT Used in Business?

MFT software is used to transfer large batches of data or compliance-protected files that cannot safely be sent through email or unsecured channels. It’s especially valuable in industries like logistics, finance, retail, and health care, where regulatory standards require data integrity and traceability.

Common MFT use cases include:

• Sending or receiving EDI transactions securely
• Transferring financial data, invoices, or purchase orders
• Exchanging large files such as engineering plans or product catalogs
• Integrating with cloud-based ERP systems and warehouse management tools

When combined with EDI, MFT strengthens communication between trading partners, ensuring fast, error-free transactions.

Core Components of Managed File Transfer

A managed file transfer solution typically includes these four components:

1. Server: Manages all aspects of the transfer, including workflows, APIs, and communication protocols.
2. Client: Connects to the server to initiate or receive transfers.
3. Proxy: Masks IP addresses and ports to enhance network security.
4. Plug-ins: Extend the MFT system to integrate with applications such as ERP, CRM, or analytics platforms.

5 Key Benefits of Managed File Transfer

Improved Data Security

MFT platforms offer encryption, access controls, and audit trails to protect data. Real-time monitoring helps detect suspicious activity and prevent breaches.

Scalability for Growing Data

As your data volume grows, MFT solutions can scale to handle higher throughput while maintaining transfer speed and reliability.

Regulatory Compliance

MFT supports compliance frameworks by maintaining an auditable trail of all data exchanges. It helps organizations meet standards like GDPR, HIPAA, and PCI DSS.

End-to-End Visibility

Unlike basic file transfer tools, MFT provides dashboards and alerts so you can monitor every file sent and received. This transparency helps identify issues before they cause downtime.

Future-Proof Integration

MFT supports hybrid and cloud environments, allowing seamless integration with cloud-based applications and EDI systems like Orderful.

Choosing the Right MFT Solution

When selecting an MFT platform, consider the following:

• Security: Look for encryption at rest and in transit, authentication, and session controls.
• Ease of Use: Choose a platform that simplifies automation and supports multiple file types like XML, CSV, and PDF.
• Visibility: Ensure it provides full visibility into transfer logs and audit trails.
• Integration: Verify it connects easily to your existing EDI, ERP, or cloud systems.
• Compliance: Confirm that it meets the security and privacy regulations your industry requires.

If you’re considering implementing MFT alongside your EDI workflows, see our guide on EDI integration best practices.

MFT vs. SFTP: What’s the Difference?

Secure File Transfer Protocol (SFTP) is a widely used method for transferring files securely between a client and a server. However, while SFTP provides encryption, it lacks the automation, reporting, and governance features of MFT.

If your organization handles sensitive data or relies on structured document exchange, MFT is the more secure and scalable option.

You can learn more about how these technologies work together in our post on AS2 and other communication protocols.

Improve Your Data Transfer Process with Orderful

Managed file transfer ensures your business can safely exchange data internally and externally, but pairing MFT with modern EDI integration amplifies its impact.

Orderful’s cloud-based EDI platform simplifies trading partner connections and ensures compliance across your entire data exchange process. Whether you’re transmitting invoices, ASNs, or partner data, Orderful helps you move faster and stay secure.

Learn how Orderful modernizes EDI integrations.

Frequently Asked Questions about Managed File Transfer

What is managed file transfer?

Managed file transfer (MFT) is a secure technology that automates and tracks data movement between systems, users, and trading partners. It ensures files are transferred safely and meet compliance standards.

What is the difference between MFT and SFTP?

MFT includes encryption, reporting, automation, and compliance features that SFTP lacks. SFTP handles small secure file transfers, while MFT is designed for large-scale, auditable data exchange.

Is MFT secure?

Yes. MFT uses encryption, authentication, and monitoring to protect data both in transit and at rest. It also provides an audit trail for compliance.

Can MFT replace EDI?

No. MFT complements EDI rather than replacing it. EDI standardizes document formats for trading partners, while MFT ensures secure transmission of those documents.

How does MFT support compliance?

MFT software logs every file transfer, encrypts sensitive data, and enforces access controls, helping organizations comply with regulations such as HIPAA, SOX, and GDPR.

What industries use MFT?

MFT is used in industries like logistics, health care, finance, and retail—anywhere large volumes of sensitive data need to be shared securely.