Credit card is the most popular mode of payment
for both online as well as offline. The use of credit cards has
increased day by day and a fraudulent transaction has also
increased day by day in today’s world. Credit card provides
cashless shopping at every shop in the world. In Credit card
fraud detection system, fraudulent transaction will be detected
after transaction is done. Credit card fraud can be detected
using Hidden Markov Model (HMM) during transactions.
Hidden Markov Model is the tools for solve “hidden”
problems. In this paper, the sequence of operations in credit
card transaction processing system using a Hidden Markov
Model and show how it can be used for the detection of fraud.
Using Hidden Markov Model, the fraud detection processing
system is trained with the standard procedures and spending
patterns of a card user.
Keywords- Hidden Markov Model (HMM).