VISVESVARAYA TECHNOLOGICAL UNIVERSITY

BELAGAVI-590018

A TECHNICAL SEMINAR SYNOPSIS ON

“UPI FRAUD DETECTION USING MACHINE LEARNING”
Submitted By

DEEPA 2LG21CS051

Under the Guidance of

Prof. VEERESH

DEPARTMENT OF COMPUTER SCIENCE & ENGINEERING

GOVERNMENT ENGINEERING COLLEGE

TALAKAL, KOPPAL-583238

2024-25
 ABSTRACT

The rise of digital transactions in India, especially through the Unified Payments Interface (UPI),
has transformed the financial ecosystem by providing a seamless, real-time, and user-friendly
payment platform. However, this growth has been paralleled by a surge in fraudulent activities,
including unauthorized access, fake UPI handles, phishing, social engineering attacks, and
transaction manipulation. Traditional fraud detection mechanisms, which rely on predefined rules
and manual intervention, often fail to detect complex or previously unseen fraud patterns.

This technical seminar presents a machine learning-based approach for UPI fraud detection that
leverages both supervised and unsupervised learning techniques to identify anomalies and classify
fraudulent behavior. The system is designed to learn transaction patterns over time, understand user
behavior, and detect deviations that could indicate potential fraud. Key features such as transaction
amount, frequency, time, geolocation, device ID, and user history are analyzed using algorithms
like Random Forest, Logistic Regression, and Isolation Forest.

The proposed model demonstrates promising accuracy and adaptability, making it suitable for
integration into real-time fraud detection systems. This seminar aims to highlight the effectiveness
of data-driven methods in enhancing digital payment security and presents a foundation for building
intelligent fraud prevention systems in fintech applications.

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 INTRODUCTION

The digital transformation in India has seen unprecedented growth in online payment systems, with
the Unified Payments Interface (UPI) emerging as one of the most popular and widely used
platforms. Launched by the National Payments Corporation of India (NPCI), UPI allows seamless,
real-time transfer of funds between bank accounts via mobile applications. Its ease of use,
interoperability between banks, and support for QR codes and UPI IDs have contributed
significantly to its widespread adoption.

However, with the increase in UPI transactions comes a parallel rise in fraudulent activities.
Cybercriminals have exploited user unawareness and technological loopholes to commit fraud
through methods like phishing, fake UPI handles, SIM swapping, spoofed apps, and social
engineering. These frauds not only lead to financial loss but also erode user trust in digital payment
systems.

Traditional fraud detection methods rely on static rule-based systems, which are often rigid, unable
to adapt to evolving fraud tactics, and prone to high false-positive rates. As fraudsters become more
sophisticated, there is a growing need for intelligent, data-driven systems that can detect anomalies
and suspicious behavior dynamically.

Machine Learning (ML) offers an effective solution to this problem. By learning patterns from
historical transaction data, ML models can predict the likelihood of a transaction being fraudulent,
even in real time. These models can adapt to new types of fraud by continuously updating their
learning based on new data. Moreover, ML techniques such as classification algorithms, anomaly
detection, and neural networks can significantly improve accuracy in identifying fraudulent
transactions while minimizies.

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 LITERATURE SURVEY

Sagar Suresh et al. every nation’s economy is built on regulations. The fintech sector isexpanding
worldwide, including in India. The government has launched a number of significant initiatives to
upport the growth of this still-developing industry since 2010. The National Payments Corporation
of India (NPCI), Aadhaar, Jan Dhan yojana, and the Goods and Services Tax (GST) are a few of
these initiatives [6]. In a variety of industries,

including lending (more than 100), personal finance management (more than 40), and investment
management (more than 90), FinTech startups have proliferated [14]. The percentage of Indians
who used the Internet increased from 7.5% in 2010 to 34.4% in 2017, and the number is expected
to rise from 437.4 million in 2017 to 666.4 million in 2023.The impact of regulatory changes on
FinTech is examined in this research paper. Industry from the standpoint of developmen.t

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METHODOLOGY

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 APPLICATIONS
1. Real-Time Fraud Detection Systems: Machine learning models can be integrated into UPI-
based mobile apps and banking systems to analyze transactions in real-time. Suspicious or
anomalous transactions can be immediately flagged or blocked, reducing the risk of financial loss.

2. User Behavior Profiling: By learning a user’s typical transaction patterns (such as amount,
frequency, location, and merchant type), ML models can detect deviations that may indicate
compromised accounts or fraudulent activity.

3. Automated Risk Scoring: Each transaction can be assigned a risk score based on features
extracted and evaluated by the ML model.

4. Financial Institutions and Banks: Banks and payment service providers can deploy machine
learning fraud detection engines within their infrastructure to improve compliance, reduce false
positives, and protect their customers from UPI-related frauds.

5. Mobile Wallets and Fintech Platforms :

Popular mobile wallets and fintech companies that support UPI can utilize ML models to enhance
the security layer of their platforms, ensuring safe digital payments for users.

6. Law Enforcement and Investigation Support

ML-generated reports and flagged transactions can support cybercrime investigation teams by
providing early alerts, transaction trails, and fraud pattern insights.

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 CONCLUSION

The rapid adoption of the Unified Payments Interface (UPI) as a leading digital payment platform
in India has brought significant convenience to users but has also introduced new security
challenges. Fraudulent activities such as phishing, identity theft, and unauthorized transactions
have become more prevalent, necessitating the development of effective fraud detection systems.
Machine learning provides a promising approach to detecting UPI fraud by leveraging data-driven
methods to learn patterns from transaction data. These systems can continuously improve as they
learn from new transaction data, making them highly adaptable to emerging fraud tactics. the use
of machine learning in UPI fraud detection represents a vital step toward securing digital payments.
By identifying fraudulent transactions early and accurately, these systems can help reduce financial
losses and build user trust in UPI platforms. As fraud tactics evolve, continued research and
innovation in this field will be crucial in maintaining the integrity of digital payment ecosystems.

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 REFERENCES

[1] Narendra Kumar, et al. (13-10-2020). product overview https://www.npci.org.in/what-

we-do/upi/ product-overview.
[2] Hunt R. (2001). Pki and digital certification infrastructure, in Proceedings. Ninth IEEE
International Conference on Network.

[3] Mohapatra S., et al. (2017). Unified payment interface (upi):a cashless indian
transaction process., International Journal of Applied Science and Engineering,

[4] Lakshmi K., Gupta H., and Ranjan J. (2019). Upi based mobile banking applications –
security analysis and enhancements, in 2019 Amity International Conference on
Artificial Intelligence (AICAI).
[5] Base-Bursey M. (26-11-2020). What are app permissions - a look into android app
permissions.

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