A transactional-behavior-based hierarchical gated network for credit card fraud detection

The task of detecting fraud in credit card transactions is crucial to ensure the security and stability of a financial system, as well as to enforce customer confidence in digital payment systems. Historically, credit card companies have used rule-based approaches to detect fraudulent transactions, but these have proven inadequate due to the complexity of fraud strategies and have been replaced by much more powerful solutions based on machine learning or deep learning algorithms. Despite significant progress, the current approaches to fraud detection suffer from a number of limitations: for example, it is unclear whether some transaction features are more effective than others in discriminating fraudulent transactions, and they often neglect possible correlations among transactions, even though they could reveal illicit behaviour. In this paper, we propose a novel credit card fraud detection (CCFD) method based on a transaction behaviour-based hierarchical gated network. First, we introduce a feature-oriented extraction module capable of identifying key features from original transactions, and such analysis is effective in revealing the behavioural characteristics of fraudsters. Second, we design a transaction-oriented extraction module capable of capturing the correlation between users' historical and current transactional behaviour. Such information is crucial for revealing users' sequential behaviour patterns. Our approach, called transactional-behaviour-based hierarchical gated network model (TbHGN), extracts two types of new transactional features, which are then combined in a feature interaction module to learn the final transactional representations used for CCFD. We have conducted extensive experiments on a real-world credit card transaction dataset with an increase in average F1 between 1.42% and 6.53% and an improvement in average AUC between 0.63% and 2.78% over the state of the art.