Abstract
Online transactions are still the backbone of the financial industry worldwide today. Millions of consumers use credit cards for their daily transactions, which has led to an exponential rise in credit card fraud. Over time, many variations and schemes of fraudulent transactions have been reported. Nevertheless, it remains a difficult task to detect credit card fraud in real-time. It can be assumed that each person has a unique transaction pattern that may change over time. The work in this article aims to (1) understand how deep reinforcement learning can play an important role in detecting credit card fraud with changing human patterns, and (2) develop a solution architecture for real-time fraud detection. Our proposed model utilizes the Deep Q network for real-time detection. The Kaggle dataset available online was used to train and test the model. As a result, a validation performance of 97.10% was achieved with the proposed deep learning component. In addition, the reinforcement learning component has a learning rate of 80%. The proposed model was able to learn patterns autonomously based on previous events. It adapts to the pattern changes over time and can take them into account without further manual training.