A transaction processing system (TPS)
supports the monitoring, collection,storage, processing, and
dissemination of the organization’s basic business
transactions. It also provides the input data for many applications
involving support systems such as DSS. Sometimes several TPSs exist
in one company. The transaction processing systems are considered
critical to the success of any organization since they support core
operations, such as purchasing of materials, billing customers,
preparing a payroll, and shipping goods to customers.
In retail stores, data flow from POS
(point-of-sale) terminals to a database where they are aggregated.
Sales reduce the level of inventory on hand, and the collected
revenue from sales increases the company’s cash position.
Transaction data may be analyzed by data mining tools to find
emerging patterns in what people buy. Such transactions occur all
In banking, TPS includes the area of deposits and
withdrawals (which are similar to inventory levels). They also
cover money transfers between accounts in the bank and among banks.
Generating monthly statements for customers and setting fees
charged for bank services are also typical transaction-processing
activities for a bank.