Could you explain the concept of distributed transactions and their role in building a microservices architecture?

A distributed transaction is a mechanism that ensures data consistency when performing operations involving multiple independent services or databases in a distributed system.

In a microservices architecture, each service typically manages its own database. When an operation involves multiple services (for example, deducting money from one account and crediting another managed by different services), it is important to guarantee that all changes are either applied or not applied at all — otherwise, the data will be in an inconsistent state.

Distributed transactions solve this problem by coordinating commits and rollbacks across services, often using protocols like two-phase commit (2PC). However, they can be complex and reduce performance.

Therefore, in microservices, alternative approaches are often used, such as the saga pattern — a sequence of local transactions with compensating operations for rollback in case of errors.

Thus, distributed transactions help ensure data integrity when interacting with multiple microservices, but require careful design and can impact scalability.