Real-time Fraud Detection for Credit Cards

Executive Summary

National Card Services, a leading credit card issuer, was facing mounting financial losses due to sophisticated transaction fraud. Their rules-based legacy system was generating too many false positives and missing novel attack vectors. Karsaaz Solutions integrated a state-of-the-art AI-driven fraud detection engine to solve the crisis.

The Challenge

The existing fraud landscape was evolving faster than the legacy system could adapt:

• High False Positives: Legitimate customer transactions were frequently blocked, leading to severe customer dissatisfaction.
• Latency Issues: Complex rule evaluations were slowing down transaction authorizations.
• Unseen Patterns: New types of fraud, such as synthetic identity and account takeover fraud, were slipping through completely undetected.

Our Solution

We designed and deployed a Machine Learning (ML) powered real-time transaction monitoring system.

Technical Architecture:

• Behavioral Profiling: Developed deep-learning models that build dynamic behavioral profiles for each cardholder based on historical spending habits, geolocations, and device fingerprints.
• Real-time Inference Engine: Deployed an ultra-low latency inference engine capable of scoring a transaction for fraud probability in under 50 milliseconds.
• Adaptive Learning: The system continuously retrains itself using the latest confirmed fraud data, ensuring it adapts to new attack vectors autonomously.
• Case Management Dashboard: Provided a comprehensive, intuitive UI for fraud analysts to investigate flagged transactions efficiently.

The Results & Impact

The implementation of AI revolutionized National Card Services' fraud management:

• Fraud Reduction: Actual fraud incidents and associated financial losses were reduced by a staggering 85%.
• Customer Experience: False positive rates dropped by 70%, dramatically improving the cardholder experience and reducing support call volume.
• Operational Agility: The adaptive nature of the ML models eliminated the need for analysts to manually update hundreds of rigid IF/THEN rules.