We’re living in a world of everything-as-an-online-service. Service providers from almost every industry are in the race to feature the best user experience for their online channels like web portals and mobile applications. This raises a new challenge. How do we stop illegal and fraudulent behaviors without impacting typical legitimate interactions? This challenge is even greater for organizations that offer paid services. These organizations need to validate payment transactions against fraudulent behaviors in their customer-facing applications. Although subsequent checks are performed by financial entities such as card networks and banks that run the payment transaction, the service providers remain responsible for the end-to-end payment process.
Organizations from all around the world have long implemented rule-based fraud detection systems. The following is an example of a sample rule:
if IP_ADDRESS_LOCATION is ’Japan’
and CUST_ADDRESS_COUNTRY is ‘Japan’
and CUSTOMER_PHONE_LOC is ‘Spain’
Although these systems are easy to