11 XII December 2023

https://doi.org/10.22214/ijraset.2023.57551
 International Journal for Research in Applied Science & Engineering Technology (IJRASET)
ISSN: 2321-9653; IC Value: 45.98; SJ Impact Factor: 7.538
Volume 11 Issue XII Dec 2023- Available at www.ijraset.com

Review Paper on UPI Fraud Detection Using

Machine Learning
Miss. Sayalee S. Bodade1, Prof. P.P. Pawade2
1 2
UG Scholar, Professor, Computer Science & Engineering, P. R. Pote (Patil) College of Engineering & Management, Amravati,
Maharashtra, INDIA

Abstract: With the rapid growth of digital transactions, the Unified Payments Interface (UPI) has emerged as a popular and
convenient method for financial transactions in the modern era. However, the increasing reliance on digital platforms has also
led to a rise in fraudulent activities. This paper proposes a robust UPI fraud detection system employing advanced machine
learning techniques to enhance the security of digital transactions. The proposed system leverages a diverse set of features,
including transactional patterns, user behaviour, and device information, to create a comprehensive model for fraud detection.
Machine learning algorithms, such as supervised learning classifiers and anomaly detection techniques, are employed to analyse
historical transaction data and identify patterns indicative of fraudulent activities. The model is trained on a labelled dataset that
includes both genuine and fraudulent transactions, ensuring its ability to distinguish between normal and suspicious behaviour
Keywords: Transaction, Payment, UPI, Attackers, Fraudulent, Hoaxers, Money, Dataset. Random forest; decision tree; logistic
regression; machine Learning; gradient boosting method; confusion matrix

I. INTRODUCTION
This technology holds the potential to minimize financial losses, protect user privacy, and enhance the overall security of digital
payment ecosystems. In this era of constant technological evolution, it is crucial for financial institutions, finch companies, and
payment service providers to implement advanced machine learning models and algorithms to stay ahead of fraudsters. This
approach not only helps in detecting known fraud patterns but also adapts to emerging threats through continuous learning and
optimization. This introduction will provide an overview of the key components and challenges involved in UPI fraud detection
using machine learning, highlighting the importance of staying ahead in the ongoing battle against financial fraud in the digital age.
With the increasing popularity of digital payment systems like UPI (Unified Payments Interface), there is a growing concern about
fraud in these platforms. This project aims to develop a robust fraud detection system for UPI transactions using machine learning
techniques. The project focuses on the development of a machine learning model that can analyze UPI transaction data in real-time
to identify fraudulent activities. The primary objective is to create a system that enhances the security of UPI transactions and
reduces financial losses due to fraud.

II. LITERATURE SURVEY

In fraud detection, we often deal with highly imbalanced datasets. For the chosen dataset (Paysim), we show that our proposed
approaches are able to detect fraud transactions with very high accuracy and low false positives – especially for TRANSFER
transactions. Fraud detection often involves a tradeoff between correctly detecting fraudulent samples and not misclassifying many
non-fraud samples. This is Often a design choice/business decision which every digital payment company needs to make. We’ve
dealt with this problem by proposing our class weight-based approach. We can further improve our techniques by using algorithms
like Decision trees to leverage categorical features associated with accounts/users in Paysim dataset. Paysim dataset can also be
interpreted as time series. We can leverage this property to build time series-based models using algorithms like CNN. Our current
approach deals with entire set of transactions as a whole to train our models. We can create user specific models - which are based
on user’s previous transactional behavior and use them to further improve our decision-making process. All of these, we believe,
can be Very effective in improving our classification quality on this dataset [1].
Now a days Digital transactions are rapidly increasing as it results in increasing online Payment frauds too. In fact, according to the
Reserve Bank of India, comparing March 2022 to March 2019, digital payments have risen in volume and value by 216% and 10%,
respectively. People are starting to go all-in with digital transactions, but one can’t deny the security issues that loom, and know-
how when it comes to online payments. Few years ago, we could have barely seen the online payment, but today UPI payment QR
code installed at doorstep.

©IJRASET: All Rights are Reserved | SJ Impact Factor 7.538 | ISRA Journal Impact Factor 7.894 | 1283
 International Journal for Research in Applied Science & Engineering Technology (IJRASET)
ISSN: 2321-9653; IC Value: 45.98; SJ Impact Factor: 7.538
Volume 11 Issue XII Dec 2023- Available at www.ijraset.com

This invited the hoaxers and attackers to develop fraudulent transactions and fool people for some amount of money. Fortunately,
the online transactions are monitored and hence could be analyses using the latest tools. In this system, an attempt is made to
develop a machine learning model to identify fraudulent transactions in a transaction’s dataset. [2]
Fraud detection for credit/debit card, loan defaulters and similar types is achievable with the assistance of Machine Learning (ML)
algorithms as they are well capable of learning from previous fraud trends or historical data and spot them in current or future
transactions. Fraudulent cases are scant in the comparison of non-fraudulent observations, almost in all the datasets. In such cases
detecting fraudulent transaction are quite difficult. The most effective way to pre-vent loan default is to identify non-performing
loans as soon as possible. Machine learning algorithms are coming into sight as adept at handling such data with enough computing
influence. In this paper, the rendering of different machine learning algorithms such as Decision Tree, Random Forest, linear
regression, and Gradient Boosting method are compared for detection and prediction of fraud cases using loan fraudulent
manifestations. Further model accuracy metric have been performed with confusion matrix and calculation of accuracy, precision,
recall and F-1 score along with Receiver Operating Characteristic (ROC) curves [3]
Financial fraud, considered as deceptive tactics for gaining financial benefits, has recently become a widespread menace in
companies and organizations. Conventional techniques such as manual verifications and inspections are imprecise, costly, and time
consuming for identifying such fraudulent activities. With the advent of artificial intelligence, machine-learning-based approaches
can be used intelligently to detect fraudulent transactions by analyzing a large number of financial data. Therefore, this paper
attempts to present a systematic literature review (SLR) that systematically reviews and synthesizes the existing literature on
machine learning (ML)-based fraud detection. Particularly, the review employed the Kitchenhand approach, which uses well-
defined protocols to extract and synthesize the relevant articles; it then report the obtained results. Based on the specified search
strategies from popular electronic database libraries, several studies have been gathered. After inclusion/exclusion criteria, 93
articles were chosen, synthesized, and analyzed. The review summarizes popular ML techniques used for fraud detection, the most
popular fraud type, and evaluation metrics. The reviewed articles showed that support vector machine (SVM) and artificial neural
network (ANN) are popular ML algorithms used for fraud detection, and credit card fraud is the most popular fraud type addressed
using ML techniques. The paper finally presents main issues, gaps, and limitations in financial fraud detection areas and suggests
possible areas for future research. [4]

III. SYSTEM DIAGRAM

Fig: System Diagram for UPI fraud Detection using machine learning

IV. CONCLUSION
In this paper we conclude machine learning techniques for UPI fraud detection proves to be a robust and effective solution in
enhancing the security and reliability of digital payment systems. The utilization of advanced algorithms, such as anomaly detection
and pattern recognition, empowers financial institutions and service providers to stay one step ahead of fraudulent activities.
Through continuous learning and adaptation, machine learning models can evolve to recognize emerging patterns and tactics
employed by fraudsters, thereby minimizing false positives and improving the overall accuracy of fraud detection systems.

©IJRASET: All Rights are Reserved | SJ Impact Factor 7.538 | ISRA Journal Impact Factor 7.894 | 1284
 International Journal for Research in Applied Science & Engineering Technology (IJRASET)
ISSN: 2321-9653; IC Value: 45.98; SJ Impact Factor: 7.538
Volume 11 Issue XII Dec 2023- Available at www.ijraset.com

The ability to analyze vast amounts of transactional data in real-time enables swift identification of suspicious activities, preventing
unauthorized access and ensuring the integrity of UPI transactions.

V. ACKNOWLEDGEMENT
First and foremost, I would like to express my sincere gratitude to my Prof. P.P. Pawade who has in the literal sense, guided and
supervised me. I am indebted with a deep sense of gratitude for the constant inspiration and valuable guidance throughout the work

REFERENCES
[1] Aditya Oza “Fraud Detection using Machine Learning” - https://github.com/aadityaoza/CS-229- project.
[2] Ms. Kishori Dhanaji Kadam, Ms. Mrunal Rajesh Omanna, Ms. Sakshi Sunil Neje, Ms. Shraddha Suresh Nandai. “Online Transactions Fraud Detection using
Machine Learning” Volume 5, Issue 6 June 2023, pp: 545-548 www.ijaem.net
[3] M. Valavan and S. Rita “Predictive-Analysis-based Machine Learning Model for Fraud Detection withBoosting Classifiers” Computer Systems Science &
Engineerin
[4] Abdulalem Ali 1,,Shukor Abd Razak 1,2,ORCID,Siti Hajar Othman 1ORCID,Taiseer Abdalla Elfadil Eisa 3,Arafat Al-Dhaqm 1,ORCID,Maged Nasser
4ORCID,Tusneem Elhassan 1,Hashim Elshafie 5 andAbdu Saif 6ORCID “Financial Fraud Detection Based on Machine Learning: A Systematic Literature
Review” https://doi.org/10.3390/app12199637.
[5] PayPal Inc. Quarterly results https://www.paypal.com/stories/us/paypalreports-third-quarter-2018-results
[6] A Model for Rule Based Fraud Detection in Telecommunications - Rajani, Padmavathamma - IJERT – 2012
[7] HTTP Attack detection using n−gram analysis - A. Oza, R.Low, M.Stamp - Computers and Security Journal - September 2014
[8] Scikit learn - machine learning library http://scikit-learn.org
[9] Paysim - Synthetic Financial Datasets for Fraud Detection https://www.kaggle.com/ntnu-testimon/paysim1

©IJRASET: All Rights are Reserved | SJ Impact Factor 7.538 | ISRA Journal Impact Factor 7.894 | 1285