Major Project Synopsis Presentation

On
Credit Card Fraud Detection System

(2022)

Presented By : Under the guidance of

Punol Norzat Lepcha(201800248) Mr. Ish Nath Jha
Manas (201800139) (Assistant Professor I, Dept. of CSE)

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY
(A constituent college of Sikkim Manipal University)
MAJITAR, RANGPO, EAST SIKKIM – 737136
CONTENTS
Abstract
1. Introduction
2. Literature survey
3. Problem definition
4. Solution Strategy
5. Design
6. Gantt Chart
References

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 ABSTRACT

Nowadays, everyone favors cashless money transaction as it is convenient

since it eliminates the necessity of carrying cash and also saves our time.

As more people use bank cards for money transactions, so does the no of
fraudulent card transactions. Since the year 2018, there has been a steady
exponential increase of no of fraudulent credit card transactions.

As a result, billions of dollars are lost to fraudulent credit card transactions.

The design of efficient fraud detection algorithms is key for reducing these
losses. More algorithms rely on advanced machine learning techniques to
assist fraud investigators.
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1. INTRODUCTION

Bank cards have grown more popular ever since the turn of the century. So much
so, that it has become a part of our daily lifestyle.[1]
As a result of this growth, cybersecurity has become immensely important to
shield people from credit card frauds.
Credit card fraud is an inclusive term for fraud committed using a payment card,
such as a credit card or debit card.[2]
Bank cards can be used as a virtual card for online transaction and a physical card
for offline transaction.
In an offline transaction, the cardholder presents his/her card to the merchant for
making a payment.
In an online transaction, the cardholder presents his/her card details such as secure
code, card number, expiration date, CVV, etc. These important information can be
stolen by the attackers.
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…continued
Fraud detection is a set of processes and analyses that allow businesses to
identify and prevent unauthorized financial activity. This includes fraudulent
credit card transactions.
Fraud detection is a term applicable in many industries including banking and
financial sectors, insurances, government agencies and law enforcement.
Credit card fraud detection technique is used to identify fraudulent credit card
transactions so that the customers are not charged for the articles they did not
purchase

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2. LITERATURE SURVEY
SL Author(s), Paper and
Publication Details
no.
1. Nilson Report- Issue 1209,
December 2021. David Robertson,
Publisher.
https://nilsonreport.com/mention/1
313/1link/
2. Kaggle Dataset for Credit Card
Transactions for Analyses by Erik
Altman and Youssef Mroueh. 14th
October,2021.
https://www.kaggle.com/ealtman20
19/credit-card-transactions?select=
credit_card_transactions-ibm_v2.cs
3. vNetwork anomaly detection based
on logistic regression of nonlinear
chaotic variants by Francesco
Palmieri,2019.
https://www.sciencedirect.com/scie
nce/article/abs/pii/S108480451930
3200
Findings
Various statistics of losses
caused by fraudulent card
transactions throughout the
years on an annual basis.
Dataset for thousands of
credit card transactions.
Detection of anomalies using
logistic regression algorithm.
Relevance to the
Project
The finding on the paper
were used in the problem
statement.
The dataset will be used for
training our machine learning
model for credit card fraud
detection.
Logistic regression algorithm
will be used train out ML
model since the fraudulent
cases were shown to be
anomalistic.
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 3.PROBLEM DEFINITION
Credit card fraud stands as major problem for financial institutions, worldwide.

Annual losses due to credit card frauds amounts to billions of dollars.

The 10th Annual online fraud report by Cyber Source shows that estimated loss die to
online fraud is $4 billion for 2008 which is 11% more than $3.6 billion loss in 2007. In
2018, $24 billion was lost due to credit card fraud worldwide.[3]

According to the annual report from the industry research firm Nilson Report, card fraud
over the next decade will cost the industry a collective $ 408.50 billion in losses globally.

The presence of a credit card fraud detector can help reduce the no of fraudulent
transactions and decreasing the annual losses.
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4. SOLUTION STRATEGY

Technologies used:
• Machine Learning: is the scientific study of algorithms and static models that
computer systems use in order to perform a specific task effectively without
using the explicit instruction, relaying on patterns and interface instead.

• Supervised Learning: used to build a mathematical model of a set of data that

contains both input an output. Basically, supervised learning is a learning in
which we train the machine using data which is well labelled i.e some data is
already tagged with the correct answer. After this, the machine is provided with
a set of new example(data) so that supervised learning algorithm analyses the
training data( set of training examples) and produces a correct outcome from
labelled data.
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SOLUTION STRATEGY(SLIDE 2)

• Unsupervised Learning: is the training of machine using information that is

neither classified nor labelled and allowing the algorithm to act on that
information without guidance. Here the task of machine is to group unsorted
information according to similarities, patterns and differences without any prior
training of data.

• Reinforcement Learning: is an are of Machine Learning Reinforcement which is

about taking suitable action to maximize reward in a particular situation. It is
employed by various software and machines to find the best possible behaviour
or path it should take in a specific situation.

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SOLUTION STRATEGY(SLIDE 3)
Data Mining: Implies classifying, grouping, and segmenting of data to search millions of
transactions to find patterns and detect fraud.

Pattern recognition: Implies detecting the classes, clusters, and patterns of suspicious
behaviour.

Machine Learning here represents the choice of a model/set of modls that best fit a certain
business problem. For example, the neural networks approach helps automatically identify the
characteristics most often found in fraudulent transactions.

Once the Machine Learning – driven Fraud Protection module is integrated into the E-
commerce platform, it starts tracking the transactions. Whenever a user requests a transaction
it is processed for some time. Depending on the level of predicted fraud probability.

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SOLUTION STRATEGY(SLIDE 4)

Algorithm used:
Logistic regression: is a statistical method that in its basic
form uses a logistic function to model a binary dependent
variable, although many more complex extensions exist. In
regression analysis, logistic regression[4] is estimating the
parameters of a logistic model (a form of binary regression).
Mathematically, a binary logistic model has a dependent
variable with two possible values, such as pass/fail which is
represented by an indicator variable, where two values are
labelled “0” and “1”.

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MODULES
Module 1: Frame the problem
Module 2: Collect raw data
 Download data from Kaggle.
Module 3: Import the libraries
 Pandas, numpy, skeleton, etc.
Module 4: Process the data analysis
 Perform logistic regression on the data.
 Explore the data.
Module 5: Perform in-depth analysis
Module 6: Communicate results of the analysis.

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6. DESIGN

Rejected
Terminal check
Correct pin?
Sufficient balance?
Blocked card?

Feedback Predictive model

Fraud score

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 7.GANTT CHART
SAMPLE
ACTIVITY TIME FRAME
JANUARY FEBRUARY MARCH APRIL MAY
FEASIBILITY STUDY

PROBLEM IDENTIFICATION

DESIGN

IMPLEMENTATION

TESTING

ANALYSIS
DOCUMENTATION

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REFERENCES
[1] https://www.thehindu.com/business/Industry/payment-industry-to-witness-multi
fold-growth/article7814959.ece

[2] https://www.bajajfinserv.in/credit-card-fraud-in-india

[3]
https://www.cybersource.com/content/dam/documents/campaign/global-fraud-repor
t-2021.pdf

[4] https://en.wikipedia.org/wiki/Logistic_regression#cite_note-1

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THANK YOU

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