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Transaction processing is information processing that is divided into individual, indivisible operations, called transactions. Each transaction must succeed or fail as a complete unit; it cannot remain in an intermediate state. Transaction mandatorily requires acknowledgment to get received as a necessary feedback for accomplishment.

Transaction processing is designed to maintain a computer system (typically a database or some modern filesystems) in a known, consistent state, by ensuring that any operations carried out on the system that are interdependent are either all completed successfully or all canceled successfully.

For example, consider a typical banking transaction that involves moving $700 from a customer's savings account to a customer's checking account. This transaction is a single operation in the eyes of the bank, but it involves at least two separate operations in computer terms: debiting the savings account by $700, and crediting the checking account by $700. If the debit operation succeeds but the credit does not (or vice versa), the books of the bank will not balance at the end of the day. There must therefore be a way to ensure that either both operations succeed or both fail, so that there is never any inconsistency in the bank's database as a whole. Transaction processing is designed to provide this.

Transaction processing allows multiple individual operations to be linked together automatically as a single, indivisible transaction. The transaction-processing system ensures that either all operations in a transaction are completed without error, or none of them are. If some of the operations are completed but errors occur when the others are attempted, the transaction-processing system "rolls back" all of the operations of the transaction (including the successful ones), thereby erasing all traces of the transaction and restoring the system to the consistent, known state that it was in before processing of the transaction began. If all operations of a transaction are completed successfully, the transaction is committed by the system, and all changes to the database are made permanent; the transaction cannot be rolled back once this is done.

Transaction processing guards against hardware and software errors that might leave a transaction partially completed, with the system left in an unknown, inconsistent state. If the computer system crashes in the middle of a transaction, the transaction processing system guarantees that all operations in any uncommitted (i.e., not completely processed) transactions are cancelled.

Transactions are processed in a strict chronological order. If transaction n+1 intends to touch the same portion of the database as transaction n, transaction n+1 does not begin until transaction n is committed. Before any transaction is committed, all other transactions affecting the same part of the system must also be committed; there can be no "holes" in the sequence of preceding transactions.

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