Chunk-based incremental feature learning for credit-card fraud data stream

Abstract

ABSTRACT Detecting fraud accurately in credit cards is critical as this financial sector incurs significant losses for cardholders. Nonetheless, most studies adopted standard machine learning and few incremental learning, which are inadequate for addressing credit card challenges, such as rapid data arrival, unlimited data, data sensitivity, and performance decline over time. For this purpose, we propose a chunk-based incremental feature learning approach that optimises the fraud model topology for each new chunk and keeps track of one chunk each time. The model consists of several connected sub-models, where a new sub-model is optimally created for each new chunk. To avoid the network growing indefinitely, we limit the number of sub-models. To this end, we retain the most relevant sub-models to the current chunk’s data distribution and re-combine them to create the optimal model. We evaluate our approach using two credit card datasets: the first of medium scale contains 2-day payments in 2013, and the second of considerable scale possesses 6-month payments in 2019. We split these datasets into multiple chunks to learn and test incrementally. We compare our approach with static learning methods trained with different scenarios. Moreover, we vary the number of historical sub-models to check their impact on the predictive performance.