Observation probability in hidden markov model for credit card fraudulent detection system

Abstract

The internet has taken its place beside the telephone and the television as on important part of people’s lives. Consumers rely on the internet to shop, bank and invest online shoppers use credit card to their purchases. In electronic commerce, credit card has become the most important means of payment due to fast development in information technology around the world.Credit card will be most consentientway to do online shopping, paying bills, online movie ticket booking, fees pay etc., In case of fraud associated with it is also increasing. Credit card fraud come in several ways, Many techniques use for find out the credit card fraud detection. Hidden markov model (HMM) is the statistical tools for Engineering and scientists to solve various problems. In this project, we model the sequence of operations in credit card transaction processing using a HMM and show how it can be used for the detection of frauds.