Conference Proceedings

Abstract

as credit card becomes the most popular mode of payment for both online as well as regular purchase, cases of fraud associated with it are also rising. In this paper, we model the sequence of operations in credit card transaction processing using a Hidden Markov Model and show how it can be used for the detection of frauds. An HMM is initially trained with the normal behavior of a cardholder. If an Incoming credit card transaction is not accepted by the trained HMM with sufficiently high probability, it is considered to be fraudulent. At the same time, we try to ensure that genuine transactions are not rejected.