In this mode, transactions are accumulated and submitted to the computer as a single ―batch.‖ In the early days of computers, this was the only way a set of transactions could be processed. Inherent in batch processing is a time delay between the batching of the transactions and the updating of the records. Sometimes this delay can be as long as overnight. Thus, errors in a batch processing system caused incorrect programs or data may not be detected immediately.
In this mode, the computer processes each transaction individually as the user enters it. The user is in direct communication with the computer and gets immediate processing/feedback on whether the transaction was accepted or not. In online systems, having the latest information available at all times is crucial so that users can make immediate decisions. These are called real-time systems