TPS: Transaction Processing Systems
Definition: A Transaction Processing System (TPS) is a type of information system that collects, stores,
modifies and retrieves the data transactions of an enterprise.
A transaction is any event that passes the ACID test in which data is generated or
modified before storage in an information system
Features of Transaction Processing Systems
The success of commercial enterprises depends on the reliable processing of transactions to
ensure that customer orders are met on time, and that partners and suppliers are paid and
can make payment. The field of transaction processing, therefore, has become a vital part of
effective business management, led by such organisations as the
Association for Work Process
Improvement and the Transaction Processing Performance Council.
Transaction processing systems offer enterprises the means to rapidly process transactions to
ensure the smooth flow of data and the progression of processes throughout the enterprise.
Typically, a TPS will exhibit the following characteristics:
The rapid processing of transactions is vital to the success of any enterprise – now more than
ever, in the face of advancing technology and customer demand for immediate action. TPS systems
are designed to process transactions virtually instantly to ensure that customer data is available to the
processes that require it.
Similarly, customers will not tolerate mistakes. TPS systems must be designed to ensure that not
only do transactions never slip past the net, but that the systems themselves remain operational
permanently. TPS systems are therefore designed to incorporate comprehensive safeguards and
disaster recovery systems. These measures keep the failure rate well within tolerance levels.
Transactions must be processed in the same way each time to maximise efficiency. To ensure this,
TPS interfaces are designed to acquire identical data for each transaction, regardless of the customer.
Since TPS systems can be such a powerful business tool, access must be restricted to only those
employees who require their use. Restricted access to the system ensures that employees who lack
the skills and ability to control it cannot influence the transaction process.
Transactions Processing Qualifiers
In order to qualify as a TPS, transactions made by the system must pass the ACID test. The
ACID tests refers to the following four prerequisites:
Atomicity means that a transaction is either completed in full or not at all. For example,
if funds are transferred from one account to another, this only counts as a bone fide
transaction if both the withdrawal and deposit take place. If one account is debited and the
other is not credited, it does not qualify as a transaction. TPS systems ensure that
transactions take place in their entirety.
TPS systems exist within a set of operating rules (or integrity constraints). If an
integrity constraint states that all transactions in a database must have a positive value, any
transaction with a negative value would be refused.
Transactions must appear to take place in isolation. For example, when a fund transfer is made
between two accounts the debiting of one and the crediting of another must appear to take place
simultaneously. The funds cannot be credited to an account before they are debited from another.
Once transactions are completed they cannot be undone. To ensure that this is the case even if
the TPS suffers failure, a log will be created to document all completed transactions.
These four conditions ensure that TPS systems carry out their transactions in a methodical,
standardised and reliable manner.
Types of Transactions
While the transaction process must be standardised to maximise efficiency, every enterprise
requires a tailored transaction process that aligns with its business strategies and processes.
For this reason, there are two broad types of transaction:
Batch processing is a resource-saving transaction type that stores data for processing at
pre-defined times. Batch processing is useful for enterprises that need to process large
amounts of data using limited resources.
Examples of batch processing include credit card transactions, for which the transactions are
processed monthly rather than in real time. Credit card transactions need only be processed
once a month in order to produce a statement for the customer, so batch processing saves IT
resources from having to process each transaction individually.
Real Time Processing
In many circumstances the primary factor is speed. For example, when a bank customer
withdraws a sum of money from his or her account it is vital that the transaction be
processed and the account balance updated as soon as possible, allowing both the bank
and customer to keep track of funds.
Further information regarding transaction processing systems can be found at the
of Illinois and
John Hopkins University.