Credit Card Fraud Detection using Hidden Morkov Model and Neural Networks

-------------------------------------------------------------------ABSTRACT---------------------------------------------------With the emergence of internet and e-commerce, the use of credit card is an unavoidable one. The credit cards are used for purchasing goods and services. We can make both online and offline payment easily with the help of credit cards. For online transaction it uses virtual card and for offline transaction it uses physical card. In today’s world, credit card provides cashless shopping at every shop. It will be the most convenient way to do online shopping. Hence, risks of credit card frauds are increasing day by day with its various techniques developed for detection. Fraud detection is a technique of identifying prohibited acts that are occurring around the world. The techniques of Data mining are also popular in detecting cyber credit-card fraud. An effective use of data mining techniques and its algorithms can be implemented to detect or predict fraud through Knowledge Discovery from unusual patterns from gathered data set. In this paper, we discussed about the various credit-card fraudsters techniques and also the detection methods for cyber credit card transactions. The goal of this paper is to provide a comprehensive review of Hidden Markov Model (HMM) and Neural Networks (NN) techniques to detect credit card fraudulent in an effective way.