Detailed Discussion on Hidden Markov Model in Credit Card Fraudulent Detection

The most accepted payment mode nowadays used is credit card for both online and offline. Credit card provides cash less shopping at every shop in all countries. It is the most convenient way to do online shopping, paying bills etc. Hence fraud detection related with it is also growing. In the existing credit card fraud detection system, the fraud is detected after it is done in the credit card transaction processing. As many of online purchases are made it is very difficult to know the person who is doing fraud. Due to this credit card transaction there is development of new concepts for secure transaction. This paper shows how Hidden Markov Model (HMM) can be used successfully to obtain a high fraud coverage combined with a low false alarm rate.