What is a Transaction Processing System?

Description: It is often difficult to decide how to process a large transaction. But when you are stuck in such a problem, then the transaction processing system comes to your rescue. With the transaction processing system, you can easily break down a huge transaction into a few smaller transactions, making the method much easier and simpler. Stay hooked to know more.

The method that enables the breaking down of transactions using unified and simpler ways is termed transaction processing. If you’re wondering what a transaction processing system (TSP) is, then know that it is a software that will help you keep track of all your transactions by processing the transaction data in an online recorder. The system makes the complicated task much easier and also saves a lot of your time. Therefore, it is surely a great system to use in your daily life. Delve into the article to know more about the transaction processing system.

Transaction Processing System

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Transaction Processing System- Types

There are two types of TSP. The types are as follows:

  • Batch Processing: The batch processing system helps you to refine clusters of transactions simultaneously with the help of a computer system. Although this method is designed to break down a huge series of programs, it has one drawback that is. It cannot provide fast transaction results.
  • Real-Time Processing: Real-time processing is designed in a way to carry out exclusive transactions. This method is better than batch processing because it ensures a faster reply to the transaction results. This is one of the best techniques for dealing with one transaction at a time.

Batch Processing vs. Real-time Processing

  • You can deal with multiple transactions in batch processing, whereas real-time processing enables you to deal with one transaction at a time.
  • Batch processing helps you deal with complex data transactions and is extremely helpful in reducing the expenses of large organizations, especially those dealing with larger data traffic. And this is much different from real-time processing because real-time processing is sufficient in dealing with less complex situations.
  • Real-time processing gives you quick and timely results about the processed transaction. Therefore, it is much more helpful for smaller enterprises. On the other hand, batch-processing takes a much longer time and does not provide quick results.
  • Batch processing does not demand user interface as soon as the process of transaction begins. But on the other hand, real-time processing demands user interface to effectively enable the processing of each transaction.

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An efficient TSP consists of a few special features. And those special features are discussed as follows:

  • Performance:The very first feature that should be kept in mind is the performance of the TSP. The system must help you to generate quick results for each transaction on time. The performance’s effectiveness is also judged based on the total number of transactions the system can manage within a particular time.
  • Undisturbed Availability: Availability is important because you need a system that is stable and reliable, and helps you to complete the transaction without crashing down. A dispute in the availability of TSP can incur a huge financial loss in an organization.
  • Data Integrity: It is very important that whatever data is being processed during the transaction must not be misused by anybody. So, the software must be developed in an effective way to protect user data. Also, the transaction processing monitor must be designed in a way to overcome common issues.
  • User-friendly: The TSP must also be user friendly so that it motivates the user for business transactions and decreases the number of errors while importing the data. Therefore, the system must be easy to understand and also smart enough to avoid incorrect data entry.
  • Modular Growth: The TSP hardware and software must effectively upgrade the transactions individually, providing a complete overhaul.
  • Controlled Processing: The user data must be in the right and safe hands. Therefore, the system must be authorized to be used only by the staff members, employees, and the personal, one at a time.

Working of the System

Working of Batch Processing

The batch transaction works on a system that requires to collect data and group batches. The collected data are stored in the form of different batches and can be processed anytime. This is a long-established technique that was used when there was no InfoTech.

Working of Real-time Processing

In recent times, technology developed and came in the market a new TSP called real-time processing. This system helps you to process instant data and also provides a fast verification of the transaction. The system shows versatility by working effectively as a multi-user interface. It can also be accessed from anywhere in the world online. This type of processing is used in mobile slot games. So, the transaction process of no deposit slots UK also uses the same system.


The four major components of a TSP are:

  • Inputs: Inputs are the source documents derived during the transaction. It serves as the input data for the computer’s accounting system. Two examples are customer orders and invoices.
  • Processing: In the processing stage, the information is broken down, following the data provided by the inputs.
  • Storage: Storage helps to store the saved information of the transaction in the form of ledgers.
  • Output: Final result provided after the transaction is complete, serves as the output.


  • Managing and handling the TSP is complicated if the company is not big and efficient enough to use it.
  • The system requires both hardware and software effectively designed to manage the high volume of data. Due to this system requirement, there can be software security breaches caused by faulty hardware and viruses. This might dispute the entire system and fail the transaction.
  • Effective data integration of the system in an organization demands skilled personnel who can manage the work effectively. It is also needed to link the system with the other company branches to enable the secure flow of data. These requirements can often create flux and instability in the daily operations of the company.


  • Hierarchical Database: This comprises a network of branches and nodes. This particular structure arranges data in a top-down system, which means the higher-level nodes are branching out towards the lower level nodes.
  • Network Database: This arranges the data in the form of node chains. Therefore, the higher-level nodes can create as many chains as they want to and connect to the lower level nodes.
  • Relational Database: This includes the use of tables related to the present data and combines them effectively.

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We hope that this article was able to help you know all about the transaction processing system. Make sure that you store the transaction data in a very secure way. Also, keep in hand a few effective and quick backup plans. Backup plans will save you from financial loss during any mishap. There are also certain techniques to recover lost data. The two most popular data recovery techniques are called backup recovery and forward recovery. Make sure that your staff members know the right implementation of these techniques when in need. So, when are you planning to implement a TSP in your organization? Do keep us posted!

Author bio: This article was composed by Thomas Glare who has also worked as a finance advisor to most people who own eCommerce businesses .