Transaction Process System (TPS)

Definition:- A transaction process system (TPS) is an information processing system for business transactions involving the collection, modification and retrieval of all transaction data. Characteristics of a TPS include performance, reliability and consistency.

TPS is also known as transaction processing or real-time processing.

A transaction process system and transaction processing are often contrasted with a batch process system and batch processing, where many requests are all executed at one time. The former requires the interaction of a user, whereas batch processing does not require user involvement. In batch processing the results of each transaction are not immediately available. Additionally, there is a delay while the many requests are being organized, stored and eventually executed. In transaction processing there is no delay and the results of each transaction are immediately available. During the delay time for batch processing, errors can occur. Although errors can occur in transaction processing, they are infrequent and tolerated, but do not warrant shutting down the entire system.

To achieve performance, reliability and consistency, data must be readily accessible in a data warehouse, backup procedures must be in place and the recovery process must be in place to deal with system failure, human failure, computer viruses, software applications or natural disasters.

Transaction processing systems capture and process the detailed information necessary to update data on the fundamental operations of an organization. Learn about the characteristics of different types of systems in this lesson.

Transaction Processing

Consider for a moment all the events that take place on a daily basis in an organization. Let's take an electronics store as an example. A single store can easily carry 10,000 different items. Throughout the day, customers come into the store, select a product and pay for it at the checkout counter. Staff is continuously taking items from the stock room and placing them on the shelves. When the stock runs low, new shipments are ordered. Other customers come in to exchange items and deal with warranty issues.

All of these events are referred to as transactions, and keeping track of them requires a transaction processing system. A transaction processing system, or TPS, is a system to capture and process the detailed information necessary to update data on the fundamental operations of an organization.

A transaction is essentially a single event that changes something. There are many different types of transactions. For example, customer orders, receipts, invoices, payments, etc. The actual processing of transactions includes the collection, editing, manipulation and storage of data. The result of processing a transaction is that the records of an organization are updated to reflect the new conditions at the time of the last processed transaction.

Consider the example of the electronics store. A customer buys a video game and pays for it with cash at the register. This event is recorded as a sale transaction. However, it also triggers other transactions.

First, the amount of cash at the register has just gone up. Second, the inventory of the particular video game has gone down by one. These transactions are logically linked - they occur on the same day at the same time and involve the same item. Linking the transactions provides improved data consistency since one cannot exist without the other. The amount of cash in the register cannot go up unless some transaction makes this happen.

There are many different types of transaction processing systems, such as payroll, inventory control, order entry, accounts payable, accounts receivable and others. Transaction processing produces valuable input into many other systems in an organization, such as management information systems and decision support systems. A TPS serves as the foundation for these other systems. A TPS tracks routine operations but does not provide much support for decision making.

For example, in the case of a bank account, a TPS keeps track of all the events associated with a single account: deposits, withdrawals, transfers, fees, interest paid, etc. This provides a good description of the account activity.

Now let's say the customer comes into the bank and requests a car loan. The account activity is useful information but not enough for the bank to make a decision on the car loan. This requires combining information from different sources and analyzing the financial profile of the customer.