A transaction processing system (TPS) collects, stores, modifies, and retrieves data about business transactions. It must pass the ACID test, ensuring atomicity, consistency, isolation, and durability of transactions. There are two types - batch processing, where data is collected and processed periodically, and real-time processing, where data is processed immediately. The transaction processing cycle involves data entry, processing transactions, maintaining databases, generating documents and reports, and allowing for inquiries. The overall purpose is to keep records of the organization, process transactions that affect those records, and produce reports.

1. TRANSACTION PROCESSING SYSTEM

2. Definition
 ATransaction Processing system (TPS) is a
type of information system that collects,
stores, modifies and retrieves the data
transactions of an enterprise.

3. Features
 Rapid response: fast performance with rapid
results.
 Reliability: well designed backup and
recovery with a low failure rate.
 Inflexibility; treat every transaction equally.
 Controlled processing; maintain specific
requirement for the roles and responsibilities
of different employees.

4. Acid test
 In order to qualify as aTPS , transactions made
by the system must pass the ACID test.
 ATOMICITY; A transaction’s change to the state
are atomic, either all happen or none happen.
These changes include database changes ,
message, and action on transactions.
 CONSISTENCY;TPS systems exist within a set
of rules .
 ISOLATION; treats each transaction separately
and keeps data from each transaction separate.
 DURABILITY; the data should continue to exist.

5. Types of TPS
 There are two types ofTPS
 Batch processing and Real time processing

6. 1. Batch Processing system
 Batch processing is where the information is
collected as a batch and then processed later
on.
 Eg ; paying by Cheque

7. Advantages
1. control over time of processing
2. Standardization
3. Reduced setup and processing costs
Disadvantages
1. time delay in gathering data , storing and bulk
processing
2. Operation cost may increase
3. Only identical data is processed in one batch
4. Errors are corrected after the processing of data

8. 2) Real Time Processing
 Real time processing is where all details of
the transaction are recorded and changed at
the time as it occurs
 Eg;ATM’s

9. Advantages
1. Error correction can be immediate
2. Data is processed as demand
3. No time delay
Disadvantages
1. Standardization may not exist or may be
more difficult
2. Processing needs make control difficult
3. System hardware and software is expensive
4. Security is critical

10. Transaction Processing Cycle
 Transaction processing system , capture and
process data describing business
transactions, update organizational
databases , and produce a variety of
information products. It should understand
this as a transaction processing cycle of
several basic activities .

12. 1 Data entry
 The first step of the transaction processing cycle is the
capture of business data.Transaction data must be entered
into the system.
 For eg; transaction data may be collected by point-of-sale
terminals using optical scanning of bar codes and credit
card readers at a retail store or other business.
 A number of input and output devices exist for entering
data .
 The documents generated at the source or point where the
transaction occurs are called source document and become
input data for the system.
 For eg; when a customer returns an items at a store , the
sales receipts becomes the source document for the
transaction ‘return items for refund / replacement’.

13. 2)Transaction processing
 Transaction processing system process data
in two basic ways;
 1) batch processing , where transaction data
are accumulated over a period of time and
processed periodically.
 2) real-time processing , also called online
processing where data are processed
immediately after a transaction occurs.

14. 3) Database maintenance
 An organizations databases must be updated by its
transaction processing systems so that they are
always correct and up-to-date.Therefore ,
transaction processing systems serve to assist in
maintaining the corporate databases of an
organization to reflect changes resulting from day-
to-day business transactions.
 For eg; credit sales made to customer will cause
customer a/c balance to be increased and the
amount of inventory on hand to be decreased .
 Database maintenance ensures that these and other
changes are reflected in the data records stored in
the company’s databases.

15. 4) Document and report
generation
 Transaction processing system produce a
variety of documents and reports.
 Eg of Transaction documents include
purchase orders, sales receipts, customer
statement etc..
 Transaction reports might take the form of a
transaction listing such as a payroll register,
or edit reports that describe errors detected
during processing.

16. 5) Inquiry Processing
 Many transaction processing systems allow you
to use the Internet, intranets, extranet, and web
browser or database management query
languages to make inquiries and receive
responses concerning the results of transaction
processing activity
 Typically , responses are displayed in a variety of
pre specified formats or screens.
 For example, you might check on the status of a
sales order , the balances in an account, or the
amount of stock in inventory and receive
immediate responSes at your PC.

17. Purpose of TPS
 To keep records about the state of the
organization.
 To process transaction that affects the
record.
 To produce output that reports on transaction
that have occurred.