Review on fraud detection methods in credit card transactions

Abstract

Cashless transactions such as online transactions, credit card transactions, and mobile wallet are becoming more popular in financial transactions nowadays. With increased number of such cashless transaction, number of fraudulent transactions are also increasing. Fraud can be distinguished by analyzing spending behavior of customers (users) from previous transaction data. If any deviation is noticed in spending behavior from available patterns, it is possibly of fraudulent transaction. To detect fraud behavior, bank and credit card companies are using various methods of data mining such as decision tree, rule based mining, neural network, fuzzy clustering approach, hidden markov model or hybrid approach of these methods. Any of these methods is applied to find out normal usage pattern of customers (users) based on their past activities. The objective of this paper is to provide comparative study of different techniques to detect fraud.