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Transaction Processing Syste

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9 views

Transaction Processing Syste

1

Uploaded by

sahilas3319
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Transaction Processing System

Transaction processing system meaning refers to an information processing system


that processes all transactions taking place within the business. Such transactions
include modification, collection, and retrieval of transaction data. A TPS is highly
consistent, efficient, and dependable. It is the same system that online businesses
utilize for e-commerce.

A TPS has the following four components. One must understand them to know how
the system works.

1. Inputs: Inputs are original requests for payments or products outside parties send to
an organization’s TPS. Typically, inputs include bills, coupons, custom orders,
and invoices.
2. Output: Outputs are the documents a TPS generates after it processes all inputs, for
example, the receipts stored by companies in their records. Such documents help
validate transactions and offer crucial reference details for tax and multiple official
purposes.
3. Storage: A TPS’s storage component is where organizations keep their output and
input data. Some businesses store the documents in a database. This component
ensures the security, accessibility, and organization of all documents for late use.
4. Processing System: The processing system goes through every input and establishes
a useful output, for example, a receipt. It helps outline the input data and defines
what the outputs must be. One must remember that the processing time varies
depending on the type of TPS an organization uses.
Features

 Controlled Access: TPSs are powerful business tools. Hence, only authorized
employees can access it. In other words, it allows only certain employees to control
and process transactions.
 Connection With The External Environment: TPS establishes a relationship
with the external environment by distributing information to suppliers and
customers.
 Fast Response: This feature is crucial for a TPS as organizations cannot afford to
keep their customers waiting long before completing a transaction.
 Inflexibility: A TPS processes all transactions in the same way, irrespective of the
time of day, user, or customer, to maximize efficiency.
 Reliability: A TPS must be reliable as customers do not tolerate errors; it must have
adequate security and safety measures.
 Distribution Of Details To Other Systems: A TPS produces and distributes
information to different systems. For instance, sales processing systems provide
information to general ledger systems.

Types

1 – Batch Processing

A TPS interprets batches or sets of data by categorizing items by similarities via


batch processing. This can cause delays as it involves reviewing various data sets
simultaneously. However, the delay is acceptable as the TPS does not interpret the
sets regularly.
Businesses may customize the batches according to their requirement. For example,
a company may want to process its workers’ wages once every two weeks.

2 – Real-Time Processing

This type of TPS processes transactions with immediate effect, thus preventing
delays. This is an ideal technique when businesses deal with singular transactions.

Advantages

 A TPS helps organizations save funds by minimizing their need to improve their
system or utilize multiple systems to fulfill demand.
 Companies can use a TPS to process transactions accurately and quickly.
 A TPS automates a significant part of a company’s revenue management and
internal resources. Because of this, employees can review transactions faster.
Moreover, this gives them more time to focus on critical thinking tasks.
 It allows businesses to carry out operations in multiple segments by working
remotely. This enables organizations to explore new markets that are full of
opportunities.

Disadvantages

 A TPS does not have a standard format.


 Companies have to incur a high set-up cost initially for TPS.
 Sometimes, hardware and software have compatibility issues.
 A TPS may stop working or slow down due to many transactions.

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