SFTP runs over SSH, the same secure protocol administrators use to log in to servers. One side hosts an SFTP server with folders, and the other connects with a user account and a password or, more often, an SSH key. Files are pushed to an inbound folder or pulled from an outbound folder, usually on a schedule.
SFTP is common for EDI because it is simple, secure and supported almost everywhere. It suits batch exchanges such as daily orders, inventory files and invoice runs, and it handles non-EDI formats like CSV, XML and spreadsheets just as easily. It is not the same as FTPS, which adds TLS encryption to the older FTP protocol.
Unlike AS2, SFTP has no built-in signed receipt. You know a file was uploaded, but not whether the trading partner picked it up and processed it, unless a functional acknowledgment or another response comes back. Polling schedules, folder naming and key changes are frequent causes of missed or duplicated files.