First of all, do not get it wrong. “Transaction email” here does not refer to only financial transactions. Quoting from MailChimp blog post:
…think of it as “anything that isn’t bulk“. Basically, it is email sent to an individual based on some action.
In my own words related to e-commerce, transaction emails are all notification emails sent out by your e-commerce/shopping cart platform related with a customer’s account or order activities such as:
- Account creation welcome email
- Password reminder/reset instructions
- Order confirmation/invoice
- Order status update
- Shipping tracking number
- Order review request, etc
By default, if you host your e-commerce platform on your own server, most likely these emails are sent directly using the server’s built-in mail application like sendmail on Apache/PHP environment. If you have this running then all is good, but what if you can make it even better? By using 3rd-party transaction email provider, you send out these emails through their server. Usually communication between your server and theirs is done through APIs or SMTP.