Transaction processing systems (TPS) are computerized systems that perform and record routine daily business transactions. There are two types of TPS: batch processing, which accumulates transactions and processes them in batches, and online transaction processing (OLTP), which processes each transaction immediately. TPS aim to ensure data integrity, produce timely documents, and increase efficiency. The processing cycle of a TPS involves data entry, database maintenance, document/report generation, and inquiry processing to keep business databases up-to-date and provide operational reports.

1. Transaction Processing System,
Characteristics and Processing Cycle
Inam Ul-Haq
Lecturer in Computer Science
UE, Okara Campus
organizer@dfd-charity.com, inam@ue.edu.pk
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Transactions
• Transactions…
• Basic business operations such as customer orders, purchase orders,
receipts, time cards, invoices, and payroll checks in an organization
• A business activity between seller and buy to exchange an asset for
payment.
• Transaction processing systems (TPS)
• A computerized system that performs and records the daily routine
transactions necessary to the conduct of the business
• Perform routine operations and serve as a foundation for other
systems
• A Transaction MIS (at operational level)
• Question: a person using ATM machine is an example of TPS?

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Batch vs. On-Line Transaction
Processing
• Two types of TPS:
• Batch processing
• A system whereby business transactions are accumulated over a
period of time and prepared for processing as a single unit or
batch
• Manufacturing products, supply chain, salaries
• On-line transaction processing (OLTP)
• A system whereby each transaction is processed immediately,
without the delay of accumulating transactions into a batch
• Real-time transaction
• Mostly in Online shopping
• Uses PCI cards(Payment Card Industry: MasterCard, Visa, Maestro,
American Express, Discover, )
• Paypal or WorldPay, WePay, eWay, ICEPAY,

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Batch vs. On-Line Transaction
Processing
(Online TPS)

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Batch vs. On-Line Transaction
Processing
(Batch Processing)

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Symbolic Representation of Payroll System

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Order Fulfillment Process

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Functions of TPS
• Input Functions
• Place an order for LUNCH
• Processing Functions
• Pizza is being prepared and served
• Output Functions
• Go to counter for payment, show discount cards, get invoice

9. Characteristics of TPS
• Performance
• Rapid Processing : customers can’t wait for TPS to respond.
• Reliability: Breakdown will disrupt or stop business
• E.g.Banking, Financial, Stocks, Airline reservations
• Consistency: All parties must agree on facts of exchange
• Atomicity: All operations fail or succeed
• Data Integrity
• TPS is primarily concerned with data integrity
• Efficiency
• Paperless Transactions
• Reduce manual data entry (errors)
• Speed up transaction process
• Elimination of redundant steps
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10. Objectives of TPS
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• Ensure data and information integrity and accuracy
• Produce timely documents and reports
• Increase labor efficiency
• Help provide increased and enhanced service
• Help build and maintain customer loyalty
• Achieve competitive advantage

11. Processing Cycle
Data Entry
• Collecting and capturing transactions
• No longer manual:
• Old technologies Bar Codes, Magnetic Strips (credit cards)
• New technologies RFID, Smart Cards,
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12. Corporate
databases
of
internal
data
Databases
of
external
data
Databases
of
valid
transactions
Operational
Databases
(CRM)
Transaction
processing
systems
MIS
Decision
support
systems
Executive
support
systems
Expert
systems
Business
transactions
Input and
error list
Drill-down reports
Exception reports
Demand reports
Key-indicator reports
Scheduled
reports
Employees
Corporate
intranet
Application
databases
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App databases
Ebay.com, photo.net uses Oracle
Facebook.com built over MySQL
Schematic View (Cont.)

13. Processing Cycle
Database Maintenance
• TPS helps ensure the databases are up-to-date and correct.
• Multiple databases (internal & external)
• A single purchase
• decreases quantity – Inventory Database
• decrease credit – Credit Card Database
• increase sales – Sales Database
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14. Processing Cycle
Document/Report Generation
• Examples
• purchase orders
• pay checks
• sales receipts
• invoices
• bank statements
An MIS also generates reports, but TPS reports are
operational (no analysis).
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15. Processing Cycle
Inquiry Processing
• Examples
• when was a purchase made
• does a customer have any credits on their account
• was an item scheduled for delivery
• was a package signed for
An MIS also allows for inquiries, but the information
available is summarized (or aggregated), i.e., What are
the total sales for a whole department? What is the best
selling product?
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16. Processing Cycle
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17. Transaction Processing
System
• An Order Entry System affects
• accounting data
• inventory data
• customer data
• financial data
• invoicing data
• Enhanced Feedback:
• Inventory is updated at the point of ordering, not at the point of
fulfillment. Eliminates surprise backorders (out-of-stock
products).
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