Online processing, also known as online transaction processing (OLTP), refers to a class of systems that facilitate and manage transaction-oriented applications, typically involving data entry and retrieval transaction processing.
In other words, it’s a method of processing data where transactions are processed immediately, without any delay. Online processing is used in applications where real-time updates are crucial and data needs to be processed quickly to immediately reflect changes in the system.
A common example of online processing is online banking. When you transfer money from your checking account to your savings account, the transaction is processed immediately and the balances in both accounts are updated in real time.
Similarly, when you book a flight ticket or hotel room online, the availability of seats or rooms is updated instantly once the transaction is confirmed.
Other examples include e-commerce transactions, online reservations, and any other system that needs to immediately capture and process user interactions.
Contrast this with batch processing, where data is collected over a period of time and processed all at once. Batch processing is often used for operations where immediate processing is not a requirement. For example, payroll systems often use batch processing, as payroll calculations are typically performed once per pay period rather than continuously.
Example of Online Processing
Imagine you’re shopping online at a retailer’s website. You find a pair of shoes you like, add them to your shopping cart, and proceed to the checkout.
As part of the checkout process, you enter your shipping address and choose your method of payment. After entering your payment details and confirming the order, an online transaction is initiated.
With online processing:
- Your payment is immediately processed. The funds are debited from your credit card or bank account, and the payment status in your order summary is updated in real time.
- The inventory status of the pair of shoes you bought is updated. If you purchased the last pair, the product’s status on the website may change to “out of stock.”
- The order is recorded in the retailer’s system and an order confirmation is sent to your email address instantly.
- The shipping process starts immediately as your order details are forwarded to the warehouse for picking and dispatch.
This is a typical example of online processing. The updates to payment status, inventory, and order records are all made immediately as part of the transaction. This real-time processing is crucial in e-commerce to ensure that payments are collected, inventories are accurately tracked, and customers receive their orders as quickly as possible.