Transaction Processing Systems in Business | Examples and Functions
About this lesson
Every organisation processes transactions. A transaction can be: • a customer purchase • a restaurant order • a hotel booking • a bank withdrawal • a salary payment • an inventory update These routine activities must be recorded accurately. Here’s the reality: A Transaction Processing System collects, processes, stores, and updates the daily transactions of an organisation. In this lecture, we explain Transaction Processing Systems, how they work, where they are used, and why they are essential for modern businesses. What You’ll Learn • what a Transaction Processing System is • what counts as a business transaction • how TPS processes daily activities • common examples of TPS • the difference between batch and real-time processing • the benefits and limitations of TPS What Is a Transaction? A transaction is a completed business activity that changes organisational records. Examples include: • making a sale • receiving a payment • placing an order • booking a room • checking in for work • withdrawing money • updating inventory Each transaction creates data that must be recorded. What Is TPS? TPS stands for Transaction Processing System. It is an Information System designed to process large numbers of routine transactions. Its main goals are: • speed • accuracy • reliability • consistency • security TPS is usually used at the operational level of an organisation. How TPS Works A typical TPS follows four basic steps: 1. Data Input The system collects transaction data. Examples include: • product scanned • payment entered • booking submitted • employee checked in 2. Processing The system checks and processes the information. It may: • calculate totals • verify payment • check availability • update balances • apply discounts 3. Data Storage The transaction is saved in a database. 4. Output The system produces an output such as: • receipt • confirmation • updated balance • order ticket • inventory record Examples of TPS Retail • point-of-sale systems • barco
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