The first issue is that you typically need secure SFTP. Biztalk 2010 finally comes with a secure FTP, but it’s FTPS (FTP over SSL) instead of SFTP (MSDN Community Link).

There is an open-source adapter available here: http://sftpadapter.codeplex.com.

On the other hand, you can use normal FTP, but use some type of encryption that can be managed by your pipeline.

However, even with SFTP or encryption, that means that the security is maintained in BizTalk, and some companies are not happy about that. You also have to consider how you test, and whether for example in your test environment, you use different passwords and encryption keys, making the deploy slightly more complicated.

However

the bigger story is this. Large companies often have the security and FTP managed by another team outside of the BizTalk team. And quite often, they have already purchased a complete solution. I worked at a bank, which used GlobalScapes EFT (Enhanced File Transfer). My most recent client used Axway Managed File Transfer (MFT), and then was switching to Axway WebTrader (Interchange).

These enterprise level FTP tools also handle details like backup. Many companies, for legal reasons, want to keep a snapshot (archive) of every file that was sent or received.

With companies that use this software, all the FTP and firewalls are handled by another group, and BizTalk simply uses the file adapter. You just need the directory paths from the group that manages all the FTP software.