Case Study: Real-Time Point of Sale Fraud Detection of Credit Card Transactions

Client: Leading Credit Card Firm

Consulting Company: VerticalServe

Implementation Period: 8 months

Technologies Used: APIs, Kafka, GPU Clusters, MLOps Pipelines, Challenger Models, Model Monitoring

Background: A leading credit card firm was facing challenges in detecting and preventing fraudulent point of sale transactions in real-time. Traditional fraud detection methods were slow and less effective, resulting in significant financial losses and damage to the firm’s reputation. The firm approached VerticalServe to develop a real-time fraud detection solution that leverages advanced technologies and various data sources to enhance the accuracy and speed of fraud detection.

Objective: To design and implement a real-time point of sale fraud detection solution for credit card transactions that can process and analyze large volumes of data quickly, enabling rapid response to potential fraud while minimizing false positives.

Solution: VerticalServe developed a comprehensive solution with the following components:

1. Data Sources Integration: The solution integrated multiple data sources, including customer account data, credit bureau information, merchant details, transaction time, and geolocation, to create a comprehensive view of each transaction.
2. Real-Time Detection using APIs: VerticalServe implemented APIs to enable real-time fraud detection, processing and analyzing each transaction within 100 milliseconds to provide instant feedback on potential fraud.
3. Kafka for Data Streaming: The solution utilized Kafka for high-throughput, low-latency data streaming, enabling the rapid processing of large volumes of transaction data in real-time.
4. GPU Clusters for Model Training: The firm’s fraud detection models were trained on GPU clusters, allowing for fast and efficient processing of large transaction and authorization datasets.
5. MLOps Pipelines and Challenger Models: VerticalServe implemented MLOps pipelines to automate the training, deployment, and monitoring of fraud detection models, as well as the evaluation of Challenger models to continuously optimize and improve model performance.
6. Model Monitoring and Review with Fraud Analysts: A user-friendly interface was developed for fraud analysts to review and validate model outputs, provide feedback, and adjust model parameters as needed, ensuring the ongoing accuracy and effectiveness of the fraud detection solution.

Results:

• Enhanced Fraud Detection Speed: The real-time point of sale fraud detection solution reduced the time taken to detect and respond to potential fraud from minutes to milliseconds, enabling the firm to prevent fraudulent transactions more effectively.
• Improved Accuracy: The integration of multiple data sources and the use of advanced technologies resulted in a 90% reduction in false positives, minimizing customer disruption and enhancing overall fraud detection accuracy.
• Reduced Financial Losses: The improved speed and accuracy of the solution led to a 70% reduction in financial losses due to credit card fraud, saving the firm millions of dollars annually.
• Scalable Solution: The cloud-based architecture and modular design of the solution allowed for easy scaling and adaptation to accommodate evolving business needs and fraud patterns.
• Continuous Improvement: The MLOps pipelines and collaboration with fraud analysts facilitated ongoing model optimization and performance improvement, ensuring the solution remained effective in the face of changing fraud tactics.

The real-time point of sale fraud detection solution developed by VerticalServe significantly improved the firm’s ability to detect and prevent credit card fraud, reducing financial losses and enhancing customer trust. The firm has since expanded the solution to other payment channels and fraud types, further strengthening its overall fraud prevention capabilities.

About:

VerticalServe Inc — Niche Cloud, Data & AI/ML Premier Consulting Company, Partnered with Google Cloud, Confluent, AWS, Azure…50+ Customers and many success stories..

Website: http://www.VerticalServe.com

Contact: contact@verticalserve.com

Successful Case Studies: http://verticalserve.com/success-stories.html

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