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 the time.

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.