A novel framework for online transaction fraud detection system based on deep neural network

Abstract

Since the introduction of online payment systems, people have started doing online transactions which has also led to the rise of fraudulent transactions causing loss of money to the users and created distrust in the usage of online payment systems. Hence, fraud detection systems are the need of the hour. Among the transactions occurring on daily basis, frauds are less in number as compared to the genuine transactions, so class imbalance naturally exists in fraud detection systems. In this research work, a novel framework for online transaction fraud detection system based on Deep Neural Network (DNN) has been proposed by utilizing algorithm-level method capable to detect frauds from imbalanced data and to maintain the overall performance of the model as well. The proposed system optimizes the decision threshold by utilizing the validation data efficiently for deciding whether an incoming transaction is a Fraud or not. For demonstration of the efficiency of our proposed system, three class imbalanced publicly available datasets have been used. Proposed system has shown better performance than data-level method. The results produced by the proposed fraud detection system have also been compared with existing machine learning techniques-based fraud detection systems. The experimental results show that the deep learning-based fraud detection system is more efficient for detecting frauds from imbalanced datasets having large number of input features as compared to the machine learning models.