Transaction processing system: What is it and how does it work?

What is a transaction processing system?

If you want your organization to be successful, you need to use systems which record transactions. That’s why, at PayRetailers we want to provide you with tools and, in this case, transaction processing system examples, aimed at adding value to the service or product you offer.

What is a transaction processing system?

Online transaction processing, also known as OLTP, is a type of data system that aims to execute a series of transactions carried out in online banking, such as purchases or order entry.

Previously, the OLTP meaning was rather limited, as it only referred to the actual interactions that existed to exchange money, information, request products or services, etc.

But this context has been changing alongside the great changes in the financial sector, and digital interaction has made it possible to remove borders and make your company grow.

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Components of the transaction processing system (TPS)

All TPS systems are made up of four components that help them to operate.


This is a request for a product or a payment that is sent to a company’s TPS. As such, if your company uses batch processing, the TPS will store groups of inputs for subsequent processing. However, if your company uses a real-time system, it will process all the data as it arrives.


This component deals with saving data. There are still some companies that store your data through documents. At PayRetailers, we want your company to grow, so we recommend you use the cloud to ensure improved security, accessibility and organization.

If a provider wants to confirm the payment, this can be verified in the system and you can determine whether the transaction is as it should be.


This system recognizes the input, whether a card or its number, to then generate a very useful closure, such as obtaining a receipt. This component helps define input and output data, which vary in time because it depends on your business’s type of TPS.


In this component, documents are generated which process all the inputs that the company has stored in its records. As such, it will help with the validity of a transaction or sale, and it will also provide information for official and tax purposes.

For example, if a supplier sends an invoice to your company, this payment has to be made in order to send the invoice as confirmation of payment.

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Types of transaction processing systems

There are two types of OLTP systems, which we will explain below.

Batch processing

This TPS interprets groups of data batches that have similarities, which is why this processing can take longer and require more computer power, since a lot of data has to be reviewed.

If a user makes a payment for a subscription service in the fortnight of the month, the system has to process that transaction as a batch because it occurs at the same time and it is acceptable because the system only reads the batches once a month.

Real-time processing

This type of processing is a way to execute transactions as they appear. It is very helpful because you avoid delays in action and the results are more precise.

We can cite the example of an ecommerce web site . Here, card transactions will be made in real time to guarantee the purchase and payment. This process will help your company quickly identify errors and make decisions for a strategic solution.

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TPS benefits

With this process, you can obtain efficiency and a good use of time. The accuracy of the forecasts, both for income and expenses, are features that benefit and simplify good organization for your company. As a result, we can highlight the following advantages:

  • A simple and practical solution for online shoppers, with efficient systems and excellent response times for your company.
  • All card types are handled well with this system.
  • It provides a forecast of income and expenses, with precision and flexibility.
  • It is easy to use, as you fill out a form and the rest will be done by the database and web servers.
  • It provides a detailed base so that your organization will remain stable and it also modifies all the transactions carried out in real time at an appropriate time.
  • The transaction is personalized because deposits are allowed according to the customer’s profile when you provide their name.

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Examples of the transaction processing system (TPS)

Some examples of transaction processing systems in the company include order processing, reservations, accounts payable and receivable, payroll, and more. This data will constantly vary due to the interactions and transactions that take place with the customer.

  • By way of example, when using a credit card and booking a flight, this is a transaction in which the company receives the order for the product and its stock. An alert is then created for employees, so that they can get the product, print the invoice, and then send the product.

A TPS processes transactions in batches and in real time. Batch processing collects data for a particular period and processes everything as a group. Unlike real time, which is immediate.

  • An example of this scenario is when a traveler reserves a seat on their form of transport. Here, the processing is in real time and immediate, so no one else will be able to select it.

Now that you know some transaction processing system examples, we want to remind you that at PayRetailers we can provide you with advice to ensure that your company can develop operationally by looking at every factor.

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