Transaction processing refers to the method of collecting, storing, and managing data generated by transactions, such as purchases or sales. This system ensures that all transactions are completed accurately and efficiently, maintaining the integrity of the data. For example, when you buy a product online, the transaction processing system records your payment, updates inventory, and sends you a confirmation. In a business context, transaction processing is crucial for operations like banking, e-commerce, and inventory management. It helps organizations track their financial activities and customer interactions in real-time, allowing for better decision-making and improved customer service.