Detection of Credit Card Fraud Transaction using Hidden Markov Model

In modern world, the most accepted payment mode is credit card for both online and offline, it gives cash less shopping at almost every shop in developed country. Hence, fraud transaction using credit card also increases. In the existing credit card fraud detection business processing system, fraud is detected after fraud is done in the credit card transaction processing. Hidden Markov Model is the statistical tools for engineer ad scientists to solve various problems. In this paper, it is shown that credit card fraud can be detected using hidden Markov model during transactions. In present models, fraudulent transaction will be detected after transaction is done. Hidden Markov model helps to obtain a high fraud coverage combined with a low false alarm rate.