CREDIT CARD FRAUD
DETECTION
USING MACHINE LEARNING
MODEL
Problem Definition
• In case of the existing system the fraud is detected after the fraud is done that is, the fraud
is detected after the complaint of the holder. And so the card holder faced a lot of trouble
before the investigation finish. And also as all the transaction is maintained in a log, we need
to maintain a huge data, and also now a day's lot of online purchase are made so we don't
know the person who is using the card online, we just capture the ip address for verification
purpose. So there needs to be a help from the cyber crime to investigate the fraud. To avoid
the entire above disadvantage we propose the system to detect the fraud in a best easy
way.
Proposed System
• In this system ,we present a hidden markov model(HMM) Which does not required
fraud signatures and yet is able to detect frauds by considering a cardholder's spending habit.
Card transaction processing sequence by the stochastic process of an HMM. The details of
items purchased in individual transactions are usually not known to an FDS running at the bank
that issues credit cards to the cardholder. Hence, we feel that HMM is an ideal choice for
addressing this problem. Another important advantage of the HMM based approach is a
drastic reduction is the number reduction in the number of false positives transactions
identified a malicious by an FDS although they are actually genuine . An FDS runs at a credit
card issuing bank. Each incoming transaction is submitted to the FDS for verification. FDS
receives the card details and the values if purchases to verify, whether the transaction is
genuine or not. The types of goods that are bought in that transaction are not known to the
FDS. It tries to find any anomaly in the transaction based on the spending profile of the
cardholder, shipping address, shipping address, and billing addresses.
How to detect fraud using Machine
Learning ?
Module Description
New card
• In this module, the customer gives there information to enroll a new card. The information is all about there contact details.
They can create there own login and password for there future use of the card.
Login
• In Login Form module presents site visitors with a form with username and password fields. If the user enters a valid
username/password combination they will be granted access to additional resources on website. Which additional resources
they will have access to can be configured separately.
Security information
• In Security information module it will get the information detail and its store’s in database. If the card lost then the Security
information module form arise. It has a set of question where the user has to answer the correctly to move to the transaction
section. It contain informational privacy and informational self-determination are addressed squarely by the invention affording
persons and entities a trusted means to user, secure, search, process, and exchange personal and/or confidential information.
Module Description
Transaction
• The method and apparatus for pre-authorizing transactions includes providing a communications device to a
vendor and a credit card owner. The credit card owner initiates a credit card transaction by communicating to a credit
card number, and storing therein, a distinguishing piece of information that characterizes a specific transaction to be
made by an authorized user of the credit card at a later time. The information is accepted as "network data" in the
data base only if a correct personal identification code (PIC) is used with the communication. The "network data" will
serve to later authorize that specific transaction. The credit card owner or other authorized user can then only make
that specific transaction with the credit card. Because the transaction is pre-authorized, the vendor does not need to
see or transmit a PIC.
Verification
• Verification information is provided with respect to a transaction between an initiating party and a verification-
seeking party, the verification information being given by a third, verifying party, based on confidential information in
the possession of the initiating party. In verification the process will seeks card number and if the card number is
correct the relevant process will be executed. If the number is wrong, mail will be sent to the user saying the card no
has been block and he can’t do the further transaction.
Thank You!
