Transaction Processing System

Published by MBA Skool Team, Last Updated: January 22, 2018

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.

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:

  • Predictability
  • Reliability
  • Consistency

Transaction processing systems are helpful in three areas:

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


Example: ATM (Automatic Teller Machine)


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.

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