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Credit Card Fraud Detection Using Hidden Markov Model

This document describes a project that uses a Hidden Markov Model to detect credit card fraud. The system models credit card transaction sequences as a stochastic process and detects anomalies compared to a cardholder's usual spending patterns, without needing signatures of past fraud. This allows the system to identify fraudulent transactions while minimizing false positives of legitimate transactions being flagged as fraud.

Uploaded by

S Veera Reddy
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
566 views

Credit Card Fraud Detection Using Hidden Markov Model

This document describes a project that uses a Hidden Markov Model to detect credit card fraud. The system models credit card transaction sequences as a stochastic process and detects anomalies compared to a cardholder's usual spending patterns, without needing signatures of past fraud. This allows the system to identify fraudulent transactions while minimizing false positives of legitimate transactions being flagged as fraud.

Uploaded by

S Veera Reddy
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CREDIT CARD FRAUD DETECTION USING HIDDEN MARKOV MODEL

T.AKHILA(07951A1201) K.SWETHA SIRISHA(07951A1255) K.SRIKANTH(07951A1253) D.P.V.SANTOSH KUMAR REDDY(07951A1246)

ABSTRACT
As credit card becomes the most popular mode of payment for both online as well as regular purchase now a days, cases of fraud associated with it are also rising. In this project, we model the sequence of operations in credit card transaction processing using a Hidden Markov Model (HMM) and show how it can be used for the detection of frauds. At the same time, we try to ensure that genuine transactions are not rejected.

INTRODUCTION
CREDIT CARD PURCHASES PHYSICAL CARD Fraud takes place when an attacker steal the card . VIRTUAL CARD- Fraud takes place when an attacker comes to know the details about the credit card i.e card number, expiration date, secure code. the only way to detect this kind of fraud is to analyze the spending patterns on every card and to figure out any inconsistency with respect to usual spending patterns.

MODULES
NEW CARD LOGIN SECURITY INFORMATION TRANSACTION VERIFICATION

MODULE DIAGRAM
START

NEW CARD

LOGIN SECURITY INFORMATION TRANSACTION VERIFICATION

STOP

FEASIBLITY STUDY
ECONOMIC FEASIBILITY

TECHNICAL FEASIBILITY
SOCIAL FEASIBILITY

EXISTING SYSTEM
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 card 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 days lot of online purchase are made so we dont know the person how is using the card online, we just capture the IP address for verification purpose. So there need 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 and easy way.

PROPOSED SYSTEM
In proposed system, we present a Hidden Markov Model (HMM).Which does not require fraud signatures and

yet is able to detect frauds by considering a cardholders 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 any Fraud Detection System(FDS) running at the bank that issues credit cards to the cardholders. 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 in the number of False Positives transactions
identified as 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 value of purchase 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, and billing address, etc. If the FDS confirms the transaction to be of fraud, it raises an alarm, and the issuing bank declines the transaction.

HARDWARE CONFIGURATION

PROCESSOR RAM MONITOR HARD DISK FLOPPY DRIVE

: : : : :

PENTIUM III 766 MHz 128 MD SD RAM 15 COLOR 20 GB 1.44 MB

SOFTWARE CONFIGURATION
OPERATING SYSTEM ENVIRONMENT .NET FRAMEWORK LANGUAGE WEB TECHNOLOGY WEB SERVER BACK END : : : : : : : Windows 2000 Professional Visual Studio .NET 2005 Version 2.0 VB.NET Active Server Pages.NET Internet Information Server 5.0 SQL SERVER 2000

USECASE DIAGRAM

New Card

User

Login

Store Info

Verification

Transaction

CLASS DIAGRAM

OBJECT DIAGRAM
LOGIN Transaction

Verification

Security Info

Complete Transaction

STATE DIAGRAM

Request

Add Information

Login

Transa ction

ACTIVITY DIAGRAM

New Account Security

Yes Account

CheckSec No Login.

Purchase.

Pay

Verification

Complete Transaction

SEQUENCE DIAGRAM
New Account User Info Login Transaction Verification Security Complete Transaction

Login Info

Transaction Details

Security Info

Verification Details

COLLABORATION DIAGRAM
New Account

1: User Info

Login

Complete Transaction

2: Login Info

5: Verification Details

Transaction

3: Transaction Details

Verification

4: Security Info

Security

COMPONENT DIAGRAM
Verification

Transactio n Security Detail

User

Account details

E-R DIAGRAM
Security Account History HAS

Transaction HAS Account Details

HAS User Security details Verification Card No.

Account Details

Security

DATA FLOW DIAGRAM


Account Details

User

Login

Transaction

Security

Verification

Complete Transaction

PROJECT FLOW DIAGRAM


User Account Area Start Transaction Verification

User

Security

User

SYSTEM ARCHITECTURE
User

Login Details

Login

Account Details

Transaction

Verification

Complete n

Security

THANKYOU

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