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Card-Not-Present Fraud Detection: Merchant Category Code Prediction of the Next Purchase

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Intelligent Systems Design and Applications (ISDA 2022)

Part of the book series: Lecture Notes in Networks and Systems ((LNNS,volume 717))

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Abstract

Card-not-present transaction fraud still have damage nowadays to banks even after implementing an advanced fraud detection system, we are talking about 75% in value of all card frauds on average [2]. About 8 million reported cases in 2018 and the number is increasing every year [2], billions of dollars are lost due to the CNP fraud and AI systems are still unable to spot those transactions in real-time, and only rely on customers reporting the fraud case after the damage already happened, in this article, We will identify the harm caused by the CNP transaction and offer a potential artificial intelligence-based solution that can forecast the future purchase based on consumer Merchant Category Code activity, fraudster MCC behavior, and how MCC usage may help avoid a fraud case. First, we will showcase the difficulty of this type of fraud, then we will answer the following question, how can a Merchant category code be used to prevent this kind of fraud? (*) finally, we will present the design of our MCC clustering solution and how it can impact the payment system actors.

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Author information

Authors and Affiliations

  1. LAVETE Lab, Faculty of Science and Technics, Hassan First University, Settat, Morocco

    Marouane Ait Said & Abdelmajid Hajami

Authors
  1. Marouane Ait Said
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  2. Abdelmajid Hajami
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Corresponding author

Correspondence to Marouane Ait Said .

Editor information

Editors and Affiliations

  1. Faculty of Computing and Data Science, FLAME University, Pune, Maharashtra, India

    Ajith Abraham

  2. Center for Smart Computing Continuum, Burgenland, Austria

    Sabri Pllana

  3. University of Bari, Bari, Italy

    Gabriella Casalino

  4. University of Jinan, Jinan, Shandong, China

    Kun Ma

  5. Department of Computer Science and Engineering, Thapar Institute of Engineering and Technology, Patiala, Punjab, India

    Anu Bajaj

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Ait Said, M., Hajami, A. (2023). Card-Not-Present Fraud Detection: Merchant Category Code Prediction of the Next Purchase. In: Abraham, A., Pllana, S., Casalino, G., Ma, K., Bajaj, A. (eds) Intelligent Systems Design and Applications. ISDA 2022. Lecture Notes in Networks and Systems, vol 717. Springer, Cham. https://doi.org/10.1007/978-3-031-35510-3_10

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