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Transaction Processing Systems

Transaction processing systems capture and process the detailed information necessary to update data on the fundamental operations of an organization. Learn about the characteristics of different types of systems in this lesson.

Transaction Processing

Consider for a moment all the events that take place on a daily basis in an organization. Let’s take an electronics store as an example. A single store can easily carry 10,000 different items. Throughout the day, customers come into the store, select a product and pay for it at the checkout counter. Staff is continuously taking items from the stock room and placing them on the shelves. When the stock runs low, new shipments are ordered. Other customers come in to exchange items and deal with warranty issues.

All of these events are referred to as transactions, and keeping track of them requires a transaction processing system. A transaction processing system, or TPS, is a system to capture and process the detailed information necessary to update data on the fundamental operations of an organization.

A transaction is essentially a single event that changes something. There are many different types of transactions. For example, customer orders, receipts, invoices, payments, etc. The actual processing of transactions includes the collection, editing, manipulation and storage of data. The result of processing a transaction is that the records of an organization are updated to reflect the new conditions at the time of the last processed transaction.

Consider the example of the electronics store. A customer buys a video game and pays for it with cash at the register. This event is recorded as a sale transaction. However, it also triggers other transactions.

First, the amount of cash at the register has just gone up. Second, the inventory of the particular video game has gone down by one. These transactions are logically linked – they occur on the same day at the same time and involve the same item. Linking the transactions provides improved data consistency since one cannot exist without the other. The amount of cash in the register cannot go up unless some transaction makes this happen.