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Whenever two people make an exchange, it is called a transaction. Transactions are important events for a company, and collecting data about them is called transaction processing. Examples of transactions include making a purchase at a store, withdrawing money from a checking account, making a payment to creditor, or paying an employee. Because transactions generally involve an exchange of money, it is critical that the data be protected during transmission and stored carefully so that it cannot be altered. It is also critical that the data be saved so that managers can verify the data if any conflicts arise. Also, the sales and purchase data from the foundation of the accounting and financial systems of every company, so the system must be able to produce the standard reports. Company, is an advanced system that records and processes insurance-related transactions. Filing and processing insurance claims is a highly information-intensive process in which every step generates new data or modifies existing data. CareNet allows the company to accurately capture this data and disseminate it at the right time to its 7 million clients. The information generated by CareNet is useful both to employees of Travelers Insurance and to its clients. A Travelers employee can access the system and look at the latest transaction; an authorized client can also access CareNet to study the status of his or her insurance claim. This system, therefore, spans organizational boundaries and provides information to both internal external entities. So when we are talking about the transactions of an organization in computerized manner, we talk about Transaction Processing System, popularly known as TPS.

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A transaction processing system is a type of information system. TPSs collect, store, modify, and retrieve the transactions of an organization. A transaction is an event that generates or modifies data that is eventually stored in an information system. To be considered a transaction processing system the computer must pass the ACID test. The essence of a transaction program is that it manages data that must be left in a consistent state. E.g. if an electronic payment is made, the amount must be both withdrawn from one account and added to the other; it cannot complete only one of those steps. Either both must occur, or neither. In case of a failure preventing transaction completion, the partially executed transaction must be 'rolled back' by the TPS. While this type of integrity must be provided also for batch transaction processing, it is particularly important for online processing: if e.g. an airline seat reservation system is accessed by multiple operators, after an empty seat inquiry, the seat reservation data must be locked until the reservation is made, otherwise another user may get the impression a seat is still free while it is actually being booked at the time. Without proper transaction monitoring, double bookings may occur. Other transaction monitor functions include deadlock detection and resolution (deadlocks may be inevitable in certain cases of cross-dependence on data), and transaction logging (in 'journals') for 'forward recovery' in case of massive failures. Transaction Processing is not limited to application programs. The 'journaled file system' provided with IBMs AIX Unix operating system employs similar techniques to maintain file system integrity, including a journal.

Characteristics & Acid Test

Transaction processing systems offer enterprises the means to rapidly process transactions to ensure the smooth flow of data and the progression of processes throughout the enterprise. Typically, a TPS will exhibit the following characteristics:

• Rapid Processing- The rapid processing of transactions is vital to the success of any enterprise ? now more than ever, in the face of advancing technology and customer demand for immediate action. TPS systems are designed to process transactions virtually instantly to ensure that customer data is available to the processes that require it.
• Reliability- Similarly, customers will not tolerate mistakes. TPS systems must be designed to ensure that not only do transactions never slip past the net, but that the systems themselves remain operational permanently. TPS systems are therefore designed to incorporate comprehensive safeguards and disaster recovery systems. These measures keep the failure rate well within tolerance levels.
• Standardisation- Transactions must be processed in the same way each time to maximise efficiency. To ensure this, TPS interfaces are designed to acquire identical data for each transaction, regardless of the customer.
• Controlled Access- Since TPS systems can be such a powerful business tool, access must be restricted to only those employees who require their use. Restricted access to the system ensures that employees who lack the skills and ability to control it cannot influence the transaction process.

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Transactions Processing Qualifiers
In order to qualify as a TPS, transactions made by the system must pass the ACID test. The ACID tests refers to the following four prerequisites:

• Atomicity
  Atomicity means that a transaction is either completed in full or not at all. For example, if funds are transferred from one account to another, this only counts as a bone fide transaction if both the withdrawal and deposit take place. If one account is debited and the other is not credited, it does not qualify as a transaction. TPS systems ensure that transactions take place in their entirety.
• Consistency
  TPS systems exist within a set of operating rules (or integrity constraints). If an integrity constraint states that all transactions in a database must have a positive value, any transaction with a negative value would be refused.
• Isolation
  Transactions must appear to take place in isolation. For example, when a fund transfer is made between two accounts the debiting of one and the crediting of another must appear to take place simultaneously. The funds cannot be credited to an account before they are debited from another.
• Durability
  Once transactions are completed they cannot be undone. To ensure that this is the case even if the TPS suffers failure, a log will be created to document all completed transactions.
  
  These four conditions ensure that TPS systems carry out their transactions in a methodical, standardised and reliable manner.

Types of Processing

While the transaction process must be standardised to maximise efficiency, every enterprise requires a tailored transaction process that aligns with its business strategies and processes. For this reason, there are two broad types of transaction:

• Batch Processing

• Real Time Processing

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