Managed file transfer (MFT) is software that sends a company's important files to banks, partners and other systems securely, on time, and with proof that each file arrived. It is used for files that must not be lost, read by the wrong person or delivered late, such as a payment file that a bank must receive before its cut-off time.
Why not simply email the file, or upload it to a website? An email can go to the wrong address, and nobody knows for certain that it was received. A file of supplier payments holds account numbers and amounts. If someone changes one account number on the way, the money goes to the wrong person. So banks and large partners accept such files only through a controlled connection.
Consider a pharmaceutical distributor in Lucknow that pays its suppliers every Friday. At 8 p.m., its ERP produces a payment file with 340 payments, worth ₹2.6 crore in total. The MFT software picks up the file from a folder. It encrypts the file, which means it scrambles the file so that only the bank can read it. It also calculates a checksum, a short number computed from the file's contents. If even one digit in the file changes, the checksum no longer matches. The software then connects to the bank's server over SFTP, a secure way to copy files between two computers, and uploads the file. At 8:04 p.m., the bank's server confirms that it has received the file. At 8:30 p.m., the bank sends back a second file. It reports that 338 payments were made, and 2 were rejected because the account numbers were wrong. The MFT software delivers this file to the ERP, and alerts the accounts team about the two rejected payments.
Every step is recorded: who sent which file, when, to whom, and whether it was received. Auditors and the bank can check this record later. If an upload fails, the software tries again. If the file has still not been delivered by 10 p.m., it alerts someone. Banks call this kind of direct file connection between a company and the bank host-to-host. At the bank, the payments are then posted in its core banking system.
MFT often runs on a schedule set by workload automation, which starts the transfer as soon as the job that makes the file has finished. Orders exchanged with retail chains in fixed formats, called electronic data interchange (EDI), usually travel over MFT as well. Connections between applications that must happen within seconds go through an integration platform instead.