CREDIT CARD FRUAD DETECTION

USING PYTHON

PROJECT REPORT

by

ANTO NIMAL A (RA2311026040034)

MOHUL RAJ T (RA2311026040015)
CHANDHAN SAYEE R (RA2311026040002)
MERLIN R S (RA2311026040004)

Under the guidance of

Dr. Prabha B

In partial fulfilment for the Course

of

21CSC203P – ADVANCED PROGRAMMING PRACTICE

in the

Department of Computer Science & Engineering (E Tech)

FACULTY OF ENGINEERING AND TECHNOLOGY

Department of Computer Science and Engineering (E Tech)

SRM INSTITUTE OF SCIENCE AND TECHNOLOGY

VADAPALANI CAMPUS

NOVEMBER 2024
 SRM INSTITUTE OF SCIENCE AND TECHNOLOGY

Vadapalani Campus

BONAFIDE CERTIFICATE

Certified that this project report for the course 21CSC203P ADVANCED
PROGRAMMING PRACTICE entitled in "CREDIT CARD FRUAD DETECTION"
is the bonafide work of ANTO NIMAL A (RA2311026040034),
MOHUL RAJ T (RA2311026040015), CHANDHAN SAYEE R (RA2311026040002)
MERLIN R S (RA2311026040004) who carried out the work under my supervision.

PROJECT SUPERVISOR HEAD OF THE DEPARTMENT

Dr B. Prabha, Dr. P. Chitra,

B.E.,[Link]., Ph.D B.E.,[Link]., Ph.D.
Assistant Professor Professor and Head
Department of Computer Science and Department of Computer Science and
Engineering(ETech) Engineering(ETech)
SRM Institute of Science & Technology SRM Institute of Science & Technology
Vadapalani Campus Vadapalani Campus
 ACKNOWLEDGEMENTS

We express our humble gratitude to our Honorable Chancellor Dr. T. R.

Paarivendhar, Pro Chancellor (Administration), Dr. Ravi Pachamuthu, Pro
Chancellor (Academics) Dr. P. Sathyanarayanan, Pro Chancellor (Admin) for
the facilities extended for the completion of the minor project work.

We would record our sincere gratitude to our Vice Chancellor,

Dr. C. Muthamizhchelvan and Registrar, Dr. S. Ponnusamy, for their support
in completing our minor project work by giving us the best of academic excellence
support system in place. We extend our sincere thanks to our Dean, Dr. C V
Jayakumar, and Vice Principal – Academics & Placements, Dr. C. Gomathy and
Vice Principal - Examination - Dr. S. Karthikeyan for their invaluable support.

We wish to thank Dr. P. Chitra, Professor & Head, Department of CSE-ETech,

SRM Institute of Science and Technology, Vadapalani Campus for her valuable
suggestions and encouragement throughout the period of the minor project work
and the course.

We extend our gratitude to our supervisor, Dr. B. Prabha, Assistant Professor,

Department of CSE-ETech, SRM Institute of Science and Technology, Vadapalani
Campus for providing us an opportunity to pursue our minor project under her
mentorship. She provided us with the freedom and support to explore the research
topics of our interest.

We sincerely thank all faculty of DCSE- ETech, staff and students of the
department who have directly or indirectly helped our minor project.

Finally, we would like to thank our parents, our family members and our friends
for their unconditional love, constant support, and encouragement.
 TABLE OF CONTENTS

[Link] TITLE [Link].

ABSTRACT 6

INTRODUCTION
7-8
1. 1.1 AIM
1.2 OBJECTIVES

1.3 BACKGROUND OF PROJECT

SYSTEM DESIGN
9-13
2. 2.1Client – Server Model

2.1.1 Client (Presentation Layer)

2.1.2 Key Components on the Client side

2.1.3 Server (Database Layer)

2.1.4 Key Components on the Server side

MODULES USED
14-17
3. 3.1 Pandas
3.2 Numpy
3.3 Sklearn
3.4 Flask
 GUI DESIGN
18-23
4. 4.1 Header Frame
4.2 Left Frame
4.3 Right Frame
4.4 Bottom Frame

DATABASE STRUCTURE
24-30
5. 5.1Table Structure

5.2 Field Descriptions and Usage

5.2.1 Member Information Fields
5.2.2 Book Information Fields
5.2.3 Transactional Fields

CONCLUSION 31
6.
 ABSTRACT

The project "Credit Card Fraud Detection System" presents the design
and implementation of a predictive system aimed at detecting fraudulent
transactions with a web-based interface developed using the Flask
framework in Python. The system seeks to enhance transaction security
by employing machine learning algorithms to analyze and identify
potentially fraudulent behavior.

Key Components and Features:

 Machine Learning Model: The system utilizes a decision tree
model trained on a dataset of transactions, equipped to recognize
patterns associated with fraudulent activity. This model,
implemented using the Scikit-Learn (sklearn) library, provides a
reliable predictive engine that flags high-risk transactions for
further investigation.
 Graphical User Interface (GUI): A user-friendly web interface
built with Flask enables users to interact with the fraud detection
system. Through various HTML templates and the Flask routing
mechanism, users can input transaction data, view prediction
results, and access fraud detection insights seamlessly.
 Data Processing Modules: Core Python libraries, including
Pandas and Numpy, are employed for data manipulation and
numerical operations. Pandas facilitates data cleaning and
formatting, while Numpy supports array operations, ensuring that
the model receives clean, structured input data.
 Database Structure: A robust backend setup stores transaction
records and user data, facilitating efficient data storage, retrieval,
and management. This structure ensures the system can scale to
handle large volumes of transactional data securely.
 CHAPTER - 1

INTRODUCTION

1.1 AIM:
The aim of this project is to design and implement an effective and user-
friendly Fraud Detection System using Python’s Flask framework for the
web interface, Scikit-Learn for predictive modeling, and data processing
libraries like Pandas and Numpy. The system seeks to enhance
transaction security by automating the detection of potentially fraudulent
transactions in real-time, providing an accessible and reliable solution
for organizations to mitigate risks associated with fraud.

1.2 OBJECTIVES:

 Web-Based User Interface: Utilize Flask to create an intuitive,

web-based interface, allowing users to input transaction data, view
prediction results, and access fraud analysis.
 Machine Learning Model: Employ a decision tree model with
Scikit-Learn to analyze transaction data and accurately classify
transactions as potentially fraudulent or non-fraudulent.
 Data Processing: Leverage Pandas for data cleaning and
manipulation, and Numpy for numerical operations, ensuring
structured and accurate data input to the model.
 Database Management: Implement a backend structure to
securely store and manage transactional data, ensuring scalability
and efficient data retrieval for analysis.
1.3 BACKGROUND OF PROJECT:

Fraud detection in financial transactions is a critical need in the digital

age, as the increase in online transactions has led to a rise in fraudulent
activities. Traditional methods of detecting fraud often rely on manual
review, which is time-consuming and limited in scale. This project
addresses these limitations by leveraging machine learning to automate
fraud detection processes.

The system uses a decision tree model trained on a historical dataset of

transactions, which identifies patterns associated with fraud. By
analyzing various transaction features, such as transaction amount and
frequency, the model can recognize unusual or high-risk behavior that
may indicate fraudulent activity. Python libraries, including Scikit-
Learn, Pandas, and Numpy, support the core functionalities by enabling
data processing, feature extraction, and efficient model deployment.

To make this solution accessible to end-users, Flask is employed to

create a web-based interface that allows users to easily interact with the
model. Users can submit transaction data and receive immediate
feedback on the likelihood of fraud, facilitating quicker decision-making
and response. This approach not only enhances the efficiency of fraud
detection but also enables organizations to respond proactively, reducing
the risk of financial losses due to fraud.
 CHAPTER – 2
SYSTEM DESIGN
The Fraud Detection System is built on a client-server architecture,
designed to separate the user interaction layer (client) from the data
processing and storage layer (server). This design approach ensures that
the system is both scalable and maintainable, making it capable of
handling complex data processing efficiently while delivering a smooth
user experience.

2.1 Client-Server Model

In this architecture, the client handles user interactions and sends

requests to the server, which processes these requests using machine
learning algorithms and returns results. This setup enables efficient data
management and responsive fraud detection capabilities.

2.1.1 Client (Presentation Layer)

The client side of the Fraud Detection System is a web interface

developed using the Flask framework. It provides a straightforward and
interactive platform for users to input transaction data and view the fraud
detection outcomes. The main functions of the client layer are:

 User Interaction:
o Users interact with the system through a simple, intuitive
interface with forms, buttons, and result displays powered by
Flask and HTML templates.
  Data Input:
o The interface includes input fields where users can enter
transaction details, such as transaction ID, amount, and
account information

 Trigger Actions:
o Based on user input, the client sends requests to the server for
fraud detection analysis, receiving results in real time.
 Display Data:
o The interface presents fraud prediction outcomes (e.g.,
"Fraudulent" or "Non-Fraudulent") along with transaction
details, providing users with clear feedback on each
transaction.
 Error Handling and User Feedback:
o The client displays error messages in case of issues, such as
connectivity problems or input validation errors, guiding
users to take corrective actions.

2.1.2 Key Components on the Client Side

 Forms and Input Fields: Capture transaction details and other
relevant inputs from users.
 Buttons: Allow users to trigger fraud detection, view results, and
reset inputs.
 Result Display: Shows whether a transaction is potentially
fraudulent based on server analysis.
 Error Messages: Provide feedback to users if errors occur (e.g.,
missing input data)
2.1.3 Server (Database and Processing Layer)

The server side consists of the machine learning model and the data storage system.
The machine learning model, built using Scikit-Learn, is designed to process
transaction data and determine the likelihood of fraud. The server layer's primary
functions are:

 Data Storage:
o The server maintains records of transactions, user profiles, and previous
analyses, stored in a structured format for easy retrieval and further
analysis.
 Data Processing:
o The server receives transaction details from the client, processes the
data, and runs it through the trained machine learning model to produce
fraud predictions.
 Security and Access Control:
o Access to sensitive information and functionalities is restricted to ensure
data privacy and system integrity.
 Model Updating and Retraining:
o The server infrastructure supports periodic updates to the machine
learning model, enabling the system to adapt to new patterns of
fraudulent activity over time.

2.1.4 Key Components on the Server Side

 Machine Learning Model: The core component, built with Scikit-Learn,

responsible for classifying transactions based on fraud likelihood.
 Data Tables: Organized to store transaction records, flagged transactions, and
user activity logs for further analysis.
 Flask Routing and APIs: Handle client requests, route them to the
appropriate model functions, and return predictions.
 Logging and Error Handling: Track server activities and handle exceptions
to ensure smooth operation.
 CHAPTER – 3

MODULES USED
3.1 Pandas

“Pandas” is a powerful Python library for data manipulation and analysis. It is

extensively used in this project to manage, filter, and organize transaction data,
making it ready for analysis.

 Functionalities Supported:
o Loading and structuring transaction datasets.
o Cleaning data to handle missing values, duplicates, and incorrect data
types.
o Aggregating and filtering transactions based on criteria for fraud
analysis.
o Transforming raw data into a format suitable for machine learning.
3.2 Numpy
“Numpy” is a fundamental library for scientific computing in Python, providing
support for large, multi-dimensional arrays and matrices. In this project, Numpy is
used to manage numerical data effectively.

 Functionalities Supported:
o Handling large arrays and complex calculations in fraud detection
algorithms.
o Supporting efficient mathematical operations on data matrices.
o Preparing data for machine learning models by handling array operations
and calculations.
3.3 Scikit-Learn (sklearn)

“Scikit-Learn” is a widely used machine learning library in Python. It provides tools

for data preprocessing, model training, and evaluation, making it essential for
developing the fraud detection model.

 Functionalities Supported:
o Data preprocessing using functions like StandardScaler for scaling
data and train_test_split for splitting data into training and test
sets.
o Building and training machine learning models, such as decision trees,
logistic regression, or neural networks.
o Evaluating model accuracy and fine-tuning parameters to improve
prediction results.
o Using ensemble methods, such as random forests, to improve fraud
detection accuracy.
3.4 Flask

“Flask” is a lightweight web application framework in Python, used to develop the front-
end interface for this fraud detection system. It serves as the communication bridge
between the user interface and the back-end fraud detection model.

 Functionalities Supported:
o Creating a web interface where users can enter transaction data for fraud
analysis.
o Routing HTTP requests and rendering pages that display fraud detection
results.
o Handling server-side logic, such as receiving input, processing with the
model, and returning the outcome to the client.
o Implementing RESTful APIs to interact with the model and provide fraud
detection results in real time.
 CHAPTER – 4
GUI DESIGN

4.1 Header Frame

 Location: Positioned at the top of the window, spanning the entire width.
 Purpose: This frame displays the system title, "Fraud Detection System,"
ensuring users instantly recognize the application’s purpose.
 Design Elements:
o Label Widget: Displays "Fraud Detection System" in a prominent and
clear format.
o Styling:
 Background Color: Light gray for a professional appearance.
 Text Color: Dark blue for contrast.
 Font: "Arial," bold and large to make the title noticeable.
 Relief Style: RIDGE to provide a subtle 3D effect around the title.
4.2 Left Frame (Data Input Frame)
 Location: Positioned below the header on the left side.
 Purpose: This frame is for inputting transaction details. It enables users to
enter transaction data, which the system will analyze for potential fraud.
 Design Elements:
o Label Frame Widget: Named "Transaction Input," making it clear that
this section is for entering transaction details.
o Input Fields (Labels and Entries):
 Each entry field is paired with a label (e.g., "Transaction ID,"
"Account Number," "Transaction Amount," "Transaction Date,"
etc.) to guide users on what data to input.
 Entry Widgets: Single-line fields for transaction-specific details.
o Combo Box Widget: Dropdown for selecting transaction types (e.g.,
"Transfer," "Deposit," "Withdrawal"), reducing typing errors.
o Design Enhancements:
 Padding and Alignment: Consistent alignment and padding
improve readability.
4.3 Right Frame (History and Statistics Frame)

 Location: Right side of the screen.

 Purpose: Provides a display of recent transaction histories and overall
statistics, offering users insight into trends and potential patterns.
 Design Elements:
o Label Frame Widget: Named "Transaction History & Stats" for quick
reference.
o Tree View Widget: Shows recent transactions in a table format, with
columns for transaction ID, date, amount, and fraud status.
 Scrollbars: Attached for easy navigation through the transaction
list.
 Selection Event: Clicking a transaction displays detailed stats in
the analysis frame.
o Chart Area: A small, embedded bar or pie chart to visualize transaction
statistics (e.g., percentage of flagged transactions).
4.4 Button Frame (Button Panel)
 Location: At the bottom of the interface, spanning the full width.
 Purpose: Contains action buttons for adding transactions, starting the
fraud detection process, viewing reports, resetting fields, and exiting.
 Design Elements:
o Button Widgets:

 Add Transaction: Adds a new transaction to the system

for analysis.
 Run Analysis: Initiates the fraud detection algorithm.

 Show Report: Opens a summary report of all transactions.

 Reset: Clears all input fields for new entries.

 Exit: Closes the application with a confirmation prompt.

o Styling:

 Button Colors: Contrasting colors for ease of

identification.
 Font Style and Size: Accessible and clear for readability.

 Padding: Ensures buttons are evenly spaced for easy

interaction.
o Event Binding: Each button is linked to a specific function.
 CHAPTER – 5

DATABASE DESIGN

The Credit Card Fraud Detection System database is designed to effectively manage
and analyze data related to users, their credit card transactions, and potential
fraud alerts. This system consists of several interconnected tables that capture
critical information necessary for identifying and mitigating fraudulent activities. By
centralizing user profiles, transaction histories, and alerts, the database enables
efficient tracking and management of suspicious behaviors. Below is an expanded
breakdown of each table, including its purpose and the role of its fields within the
system.

5.1 TABLE STRUCTURE:

The main tables in this system include Users, Transactions, FraudAlerts,

and CardDetails. Each table holds fields relevant to its specific purpose within
the system.

1. Users Table

Field Name Data Type Description

UserID INT A unique identifier for each user in the system.
FirstName VARCHAR(50) Stores the first name of the user for identification.
LastName VARCHAR(50) Stores the last name of the user for identification.
Stores the user's email address for
Email VARCHAR(100) communication and notifications related to their
account.
Stores the user's contact number for verification
PhoneNumber VARCHAR(15)
and fraud alerts.
Contains the residential or contact address of the
Address VARCHAR(255)
user.
 2. Transactions Table

Field Name Data Type Description

A unique identifier for each transaction
TransactionID INT
processed through the system.
Foreign key linking to the Users table,
UserID INT identifying the user associated with the
transaction.
DECIMAL(10, The monetary amount involved in the
Amount
2) transaction.
TransactionDate DATETIME The date and time when the transaction occurred.
The name of the merchant where the transaction
MerchantName VARCHAR(100)
took place.
The geographical location of the transaction,
Location VARCHAR(100)
often captured as a city or store address.
Specifies the type of transaction (e.g., purchase,
TransactionType VARCHAR(20)
withdrawal).
The card number used for the transaction,
CardNumber VARCHAR(20)
masked for security (e.g., last four digits).

3. FraudAlerts Table

Field Name Data Type Description

A unique identifier for each fraud alert generated by
AlertID INT
the system.
Foreign key linking to the Transactions table,
TransactionID INT
identifying the transaction that triggered the alert.
Foreign key linking to the Users table, identifying the
UserID INT
user associated with the transaction.
AlertDate DATETIME The date and time when the fraud alert was generated.
The current status of the fraud alert (e.g., pending,
Status VARCHAR(20)
resolved, dismissed).
Any additional comments or notes regarding the fraud
Comments TEXT
alert, used for tracking or investigative purposes.
4. CardDetails Table

Field Name Data Type Description

A unique identifier for each credit card in the
CardID INT
system.
Foreign key linking to the Users table, identifying
UserID INT
the user to whom the card belongs.
The credit card number, masked for security (e.g.,
CardNumber VARCHAR(20)
last four digits).
ExpirationDate DATE The expiration date of the credit card.
The CVV number associated with the credit card,
CVV VARCHAR(4)
masked or encrypted for security.
The type of credit card (e.g., Visa, MasterCard,
CardType VARCHAR(20)
American Express).

5.2 Field Descriptions and Usage

5.2.1 Users Table Fields:
 UserID: Serves as a unique identifier for each user, enabling efficient
management of user records and their associated transactions.
 FirstName & LastName: Used for personal identification and
communication purposes.
 Email: Essential for sending alerts and notifications regarding
account activities, including potential fraud.
 PhoneNumber: Provides a method for contacting users about
suspicious activities or transactions.
 Address: Useful for verification and fraud detection, as it helps
identify unusual transactions that deviate from a user's usual
behavior.
5.2.2 Transactions Table Fields:
 TransactionID: Uniquely identifies each transaction, enabling
tracking and analysis for potential fraud.
 UserID: Links the transaction to the corresponding user, crucial for
understanding transaction history and patterns.
 Amount: Analyzing transaction amounts can help identify suspicious
behavior, such as unusually large transactions.
 TransactionDate: Time-stamping transactions aids in fraud detection
by highlighting trends or spikes in activities.
 MerchantName: Helps categorize spending habits and identify any
unusual transactions based on past behavior.
 Location: Important for spotting potential fraud by flagging
transactions occurring in unusual locations for a user.
 TransactionType: Useful for identifying patterns or anomalies in
transaction types that may indicate fraud.
 CardNumber: Linking transactions to specific cards aids in tracking
and managing potential fraudulent use of a user's card.

5.2.3 FraudAlerts Table Fields:

 AlertID: Uniquely identifies each fraud alert for tracking and
management purposes.
 TransactionID: Links the alert to the specific transaction that raised
suspicion.
 UserID: Connects the alert to the user, allowing for a comprehensive
review of their account status.
 AlertDate: Helps track the timeliness of alerts and the system's
responsiveness to potential fraud.
 Status: Provides an overview of the alert’s current state, facilitating
management and resolution of fraud cases.
 Comments: Enables fraud analysts to document findings,
investigations, and decisions regarding alerts.
5.2.4 CardDetails Table Fields:
 CardID: Acts as a unique identifier for managing card-related
information, aiding in security and fraud detection efforts.
 UserID: Links each card to the appropriate user for transaction
tracking and alert generation.
 CardNumber: Essential for managing card information securely
while ensuring that only authorized transactions are processed.
 ExpirationDate: Important for validating the card's legitimacy and
preventing the use of expired cards in transactions.
 CVV: Enhances security in transactions, ensuring that the correct
cardholder is using the card.
 CardType: Helps in categorizing and analyzing transaction data
based on card types, which can aid in fraud detection.
 CHAPTER – 6

CONCLUSION

The Credit Card Fraud Detection System is designed to provide a robust

and efficient mechanism for detecting and managing potentially
fraudulent activities related to credit card transactions. Its structured
database enables seamless interaction between users, their transactions,
and fraud alerts, facilitating real-time monitoring and analysis. Future
enhancements may include advanced machine learning algorithms to
improve fraud detection accuracy and automated notification systems for
users regarding suspicious activities. By employing a relational database
management system like MySQL, the system can handle large volumes of
transactional data while ensuring data integrity and security.
Furthermore, a user-friendly interface will allow financial institutions and
their customers to easily access information and respond promptly to
fraud alerts, fostering trust and safety in financial transactions.