DESIGN AND IMPLEMENTATION OF A DEBIT CARD FRAUD DETENTION SYSTEM

CHAPTER ONE

INTRODUCTION

Background to the study

Over the past 20 years banks and other financial services organizations have been developing and implementing electronic on-line systems to better serve their retail customers. These systems have involved an access device, usually a magnetic-striped card and an associated personal identification number (PIN), issued to customers by their financial institution (FI). These access devices, often called debit cards, can then be used by customers in automated teller machines (ATMs) and more recently in point of sale (POS) terminals to gain access to their accounts for the withdrawal of funds in the form of cash or goods and services. For distribution and economic reasons, FIs began sharing usage on both the systems with the ATM and POS terminals used to gain entry to the systems. This shared environment has grown to the point where 100s of millions of transactions worth 10s of billions dollars flow through it each month. This has translated into a real convenience for FI customers and a business success for the industry. However, as the volume of dollars moved by these services has grown, more attention is being focused on the potential security threats, particularly fraud.

Debit Card is an electronic payment card issued by banks to replace cash payment, is widely used in many countries. Debit card payment can be used in several transactions such as cash withdrawal, tranfers, payments, purchases, balnce information, registration, change pin, top up[1, 2]. This card also functions as a replacement for cash payment. This card refers to the balance in the issuing bank. The functionn of debit card is to facilitate payment during shopping without having to bring cash. In several cases, the primary account number is given exclusively to be used in the internet and no requirement for the physical card. In Indonesia for example, the availability of ATM and the merchant receiving the ATM card contributed to the popularity of debit card such that ATM transactions becomethe main banking transactions Jog [2014]. Due to this condition, the number of fraud increases. Debit card fraud is increasing, and the potential for more and larger losses is significant. The industry has inadequate technical solutions in place to prevent this fraud and lacks a monitoring system for its early detection. Known technological solutions (described below) for significantly reducing this risk are expensive and several years away from implementation. The debit card industry risks not only theft losses but also potentially is exposed to loss of consumer confidence and consequent dramatic reductions in card usage and attendant revenues.

Statement of the Problem

Fraud is an illegal act for the purpose of getting service, goods and money. In the last decade, fraud include several illegal practices and illegal acts. The main causes of information theft are skimming, card traps, PIN sharing, social engineering, fake call center and card informatino theft. The actor of fraud maybe imitating good customers and uses several bank transactions to perform illegal act. Fraud has caused massive financial losses, loss of data, destroying the reputations of financial institutions ; Therefore as an effort and initiatives, it is important to be able to identify fraud transactions. Several statistical model have been proposed to identify transaction frauds. Studies include using actual data transactions, a combination of actual data set and syntetics ,or the low level of communication packets from ATM to ATM Server. This research is conducted in order to propose to detect frauds on debit card transactions.

Aim and Objectives

The main thrust for this thesis is to Design and Implementation of a debit card fraud detention system to prevent debit card fraud.

The study were guided by the following specific objectives;

• To automate a system that will detect a debit card fraud
• To design a system that will prevent unauthorized access of debit card by third parties
• To develop a system that will combat fraud by tracking and reporting suspected fraudulent transactions to the debit card issuers bank.

Significance Of The Study

This project work will enhance the security of debit card holder, as a result, an effective fraud detection system for debit cards is vital for any financial institution to mitigate the risk of fraudulent transactions. It is costly for financial institutions to keep absorbing losses, as it creates financial uncertainty for them.

Scope of Study

The range at which the research work will go will not exceed debit card fraud detention system to prevent debit card fraud.

Limitation of Study

These are the point that limit the range of this study

• Effective bank security
• Lack of fund
• Limited time
• Unable to leave the school premises for further research.

DEFINITION OF TERMS

ATM:  Automated teller machine

ALGORITHM:  An algorithm is a set of instruction that shows the step to follow in order to solve a problem.

DATA:  These are raw facts that are to be processed.

FLOWCHART: is the diagrammatic representation of sequence of events to be followed in solving problem.

FILES: Is a collect of related data record.

FIELD NAME:  This contains items about every record.

PROGRAM: Is a set of instructions of given for the computer to carryout a specific task.

INTEGER: Is referred to as a whole number.

STRING: Is referred to as a finite sequence of 3-ero or more character.

PERIPHERALS: is the physical component of the computer system.

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