Transaction Processing System- Components, Attributes

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According to the research, 1.01 billion dollars in credit card transactions occur every day around the world in 2018. Now, the numbers are increasing day by day after the covid-19 wave. 

Transaction Processing System helps to work in the real-time-based system. It is used in railway reservation systems, accounting systems, banking systems, etc.

There are different types of Transaction Processing Systems such as payroll, order entry, inventory control, accounts payable, etc.

Matter of fact, the Transaction Processing System is the major factor for the rise in the global economy.

What is a Transaction Processing System?

A Transaction Processing System is an information processing system that collects and stores data about business transactions and sometimes controls decisions made as part of a transaction. The transaction is the process of exchanging goods, services in terms of money.

Advantages of Transaction Processing System

1. Real-time processing

This system is based on real-time. It helps in the execution of data in a short period, providing near-instantaneous output.

Good examples of real-time data processing systems are bank ATMs, traffic control systems and modern computer systems such as the PC and mobile devices.

2. Increase in productivity and customer satisfaction 

If the system is fast, then it leads to an increase in productivity and customer satisfaction. And, the Transaction Processing System is also one the fastest systems.

3. Security

Security is one of the main key factors. Similarly, it helps to make good security of the users while doing multiple transactions.

4. Systematic

Simply, a part or unit of the system cannot work solely. It needs whole parts to work successfully. 

Meanwhile, working successfully, it provides a systematic facility to the users.

What are the components of the Transaction Processing System?

1. Input

Source documents such as customer orders, invoices, purchase orders, etc. serve as Inputs to the Transaction Processing System.

2. Processing 

Once the inputs are provided, they are further processed to get an output.

3. Storage

Ledgers serve as a source of storage. Examples of ledger accounts are cash, account receivable, inventory, fixed assets, accounts payable accrued expenses, debt, stockholders’ equity, revenue, cost of goods sold, salaries and wages, offices expenses, depreciation, and income tax expense.

4. Output

Any document generated is termed as output.

What are the attributes of a Transaction Processing System?

1. Access Controls 

The system has features by which only authorized users are allowed to access the system. Thus, any unauthorized user cannot make changes to the system or access the system.

Meanwhile, the access control feature leads to the security of the Transaction Processing System.

2. Equivalence

It provides a similar format to its users for data entry thus users’ efficiency gets increased and the overall system effectiveness is also improved.

3. High Volume Rapid Accessing 

It should be very fast while performing. Multiple transactions are done within a certain period.

As a result, we need a system to work more quickly and efficiently. A Transaction Processing System must be such that it may handle a large number of transactions without any failure.

4. Reliability

The system should be such that it is available day and night. Moreover, the system should be such that we can believe it is secured and error-free.

Also Read, 10 Best Data Visualization Tools Available Today>>

Qualities of Transaction Processing System

1. Atomicity

A transaction must be completed in full and not in parts. Without one unit or part being successful to work, the system won’t work well. 

Hence, a transaction must take place in its entirety.

2. Consistency

Data integrity or consistency should be well maintained. Cash should never go negative in the books, this is a requirement of the management so the system should be such that it does not accept any cash payment-related transaction when the cash is not available.

3. Isolation 

Isolation is needed in the Transaction Processing System. It should not distribute any individual privacy while transactions.

In contrast, debit and credit should occur simultaneously without affecting each other.

4. Durability

A transaction which is not confirmed should not be recorded and transactions that are completed should be edited only with prior approval.

What are the five cycles of the Transaction Processing System?

The five cycles of the Transaction Processing System are as follows:

  1. Data entry activities
  2. Transaction processing activities
  3. File and database processing
  4. Document and report generation
  5. Inquiry processing activities