A transaction processing system is a computer database system that balances and controls purchases of goods and services within a business network. A common example is a company's online store. The transaction processing system coordinates the warehousing and distribution of the item, the credit and bank transaction from the consumer's payment account and the business's management of inventory, sales, profits and payroll. This complex system has many advantages and disadvantages.

Handling Operations

In some ways, the main benefit of a transaction processing system can also be a disadvantage: the handling of several thousand operations at once. The transaction processing system must simultaneously coordinate thousands, even millions, of purchases, debit consumers' bank accounts, hold each person's private banking and address information and ship out or process the order to the consumer. This system is helpful for any business that wants to make selling goods and services easier for consumers. However, this complex system can be difficult to handle if the business is not large enough to utilize a transaction processing system.

Security and Hardware Problems

Transaction processing systems are a combination of software and hardware used to handle immense quantities of consumer and business data. Because of this, viral security breaches may occur in this system, especially because consumers' private information is held within the database. Also, any hardware malfunction, such as an electrical outage, could damage a well integrated system that serves millions of consumers. If a business has the resources, the business can invest in high-quality computer security to ensure consumer protection and have hardware to back up data or generators for electricity.

Access to Untapped Markets

A transaction processing system makes it easier for consumers around the world to utilize a business's services through a simple online system. Transaction processing systems allow people from across the world to access a business and buy that business's goods and services. In a globalized market, the potential for growth is enhanced when the processing system is implemented properly.

Too Much Consolidation

Investing in a transaction processing system requires a lot from a firm. It requires technical people to maintain it 24 hours a day, seven days a week. The business will also need flawless integration with other departments, such as shipping, payroll processing, accounting and inventory. The business will need to create new departments, which may include international shipping or an information technology department. All these variables could create fears that too much consolidation and change is taking place. Some businesses are incapable to being the lone provider of every service to consumers.