Transaction processing is a type of computer processing that takes place in the presence of a computer user. It allows for an immediate response to a user request (or transaction). When a large number of transactions are taken and then stored to be dealt with at a later time (without the presence of a user), the process is known as batch processing. Different examples of transaction processing include automated teller machines, credit card authorizations, online bill payments, self-checkout stations at grocery stores, the trading of stocks over the Internet, and various other forms of electronic commerce.

Every business has to deal with some form of transactions. How a company decides to manage these transactions can be an important factor in its success. As a business grows, its number of transactions usually grows as well. Careful planning must be done in order to ensure that transaction management does not become too complex. Transaction processing is a tool that can help growing businesses deal with their increasing number of transactions.


One place where transaction processing has made a big splash is on the Internet. The advent of online technology has made the international distribution of goods and information a quick and often simple process. Customers have grown accustomed to placing orders online. The emergence of features like secure servers, one-click shopping, and tracking of packages over the Internet have helped make them feel more at ease with the process.

Transaction processing on the Internet includes several options for those who want to use a credit card or a checking account to pay for goods that do not originate from a typical e-business site, almost as if it is digital cash. One example of this type of service is PayPal, which touts itself as the world's first instant and secure online payment service. With PayPal, anyone can register to send and receive payments through the Internet. This service has gained most of its popularity on auction sites like eBay, but can also be used for simple transactions between any two people in the world that have email accounts. Users have found this to be a safe, fast, easy, convenient, and inexpensive way to distribute money in the digital world. PayPal's service is free to most consumers, although there can be small service fees to businesses that decide to use it for a large number of transactions. PayPal only requires that users have either a valid credit card or active checking account.

Retailers have also enjoyed the benefits of jumping on the Internet bandwagon to help with the processing of their transactions. A company can set up a web site for their customers to purchase merchandise and the order can taken, fulfilled, and processed by someone else (for example, Yahoo handles the distribution of products for many online companies). If a business decides to go this route, they may want to make themselves totally aware of the shipping charges that a particular firm will charge to send their goods. Many times, the shipping charges for products purchased over the Internet have a tendency to become inflated, causing consumers to become annoyed and even angry because they feel like they are being taken advantage of. A smart business would do anything in their power to keep this from happening and possibly alienating their loyal customer base. Other possible problems that often plague online world—such as computer system outages, slow servers, and security issues—should also be considered.


The Transaction Processing Performance Council (TPC) is a non-profit corporation that defines transaction processing and provides database benchmarks that distribute information to the industry. The TPC emerged in the early 1980s just as ATMs, gasoline pumps that accepted credit cards, and other electronic payment devices began to gain popularity. Today they are as busy as ever as the online transaction processing industry registers billions of dollars in yearly sales. The TPC also monitors and measures transaction processing and database performance in terms of how many transactions a system can perform in a given amount of time of time. Many businesses can benefit from the work of the TPC, including retail stores, online businesses, electronic stock brokers, and travel agencies. Their dedication will only ensure that the quality of conducting transactions remains at the highest possible level. For more information on what they do, visit .


The growth in the transaction processing industry can only mean good things for small businesses. For example, a company that distributes and manages coin operated video games and vending machines can expand its business by teaming up with a transaction processing firm that will help allow the machines to accept credit cards. A small antique store can increase business by marketing its goods over the Internet and then accepting payments through PayPal or another similar service. As is the case with most sound business decisions, managers should acquire proper education and knowledge about transaction processing before committing to it.


Guerrisi, Joseph. "Making Money Move Faster." Supply Chain Management Review. January 2001.

Hapgood, Fred. "Online Transaction Processing Takes a Bow." CIO. February 15, 2001.

Hunt, Clair. "In the Blink of an Eye." Computer Weekly. March 31, 1994.

Overton, Rick. "Signed, Sealed, Delivered … Online." PC World. November 1999.

Also read article about Transaction Processing from Wikipedia

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