Transaction Processing System - Meaning, Importance & Example

Published by MBA Skool Team, Last Updated: January 20, 2022

What is Transaction Processing System?

Transaction Processing System is a type of information processing system, software and hardware combination, which supports Transaction processing. Transaction processing is a type of computer processing in which each individual indivisible task, called a transaction, is worked upon and executed as and when it comes. The response to requests is immediate. In contrast to this is batch processing in which a batch of requests are stored and then executed all at once. A transaction Processing System is also used to collect, store, retrieve and modify transactions executed by an organization.

Importance of Transaction Processing System

In transaction processing, user or customer interaction is required, unlike batch processing. It allows only certain predefined, typically short duration, tasks and transactions to be performed by the user and provides a predictable request execution time, which is pre- programmed. This gives it the following characteristics:

1. Predictability
2. Reliability
3. Consistency

Transaction processing systems are helpful in three areas:

1. System runtime functions - An execution environment with high response time, reliability of execution and security of data
2. System administration functions - Administrative support required for managing transactions
3. Application development functions – Customization support to design and manage the user interface.

Examples of Transaction Processing Systems

ATM (Automatic Teller Machine) is a good example of it as it processes each transaction based on customer and amount required. ERPs are also good examples of transaction processing systems

Hence, this concludes the definition of Transaction Processing System along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.

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