A Software Requirements Specification

on

Fraud Detection System

Submitted in Partial Fulfillment for the Award of Degree of Bachelor of Technology in
Computer Science and Engineering from Rajasthan Technical University, Kota

MENTOR: SUBMITTED BY:

Dr Arpita Sharma Vinita Garg (21ESKCS847)
(Dept. of Computer Science & Engineering) Vishal Kunwar (21ESKCS848)
Alisha Agarwal (21ESKCS300)
COORDINATOR:
Mr. Manish Bhardwaj
(Dept. of Computer Science & Engineering)

DEPARTMENT OF COMPUTER SCIENCE & ENGINEERING

SWAMI KESHWANAND INSTITUTE OF TECHNOLOGY,

MANAGEMENT & GRAMOTHAN
Ramnagaria (Jagatpura), Jaipur – 302017

SESSION 2024-25
1 Introduction 1
1.1 Purpose 1
1.2 Motivation 2
2 Market survey 4
2.1 Compatible study of similar solution 4
3 Requirements 6
3.1 Functional Requirements 6
3.2 Non- Functional Requirements 7
3.3 Hardware Requirements 7
3.4 Software Requirements 7
3.5 Agile Model 8
4 System Architecture 11
4.1 Client-Server Architecture 11
5 Design and Implementation 13
5.1 Product Features 13
5.2 Data flow diagram (DFD-0, DFD-1, DFD-2) 14
5.3 E-R Diagram 17
5.4 Class diagram design 18
5.5 Use case diagram 19
5.6 Sequence diagram 20
6 UN sustainable development goals 21
7 Conclusion & Future scope 24

Table of Contents
 Chapter-1
Introduction

1. Introduction
We chose to develop SafeTransact, an online fraud detection system, because both businesses
and consumers face increasing challenges when dealing with online transactions. A Fraud
Detection System after transaction is a critical tool used by financial institutions, businesses, and
online platforms to identify fraudulent activities that may occur after a transaction has been
completed. While many fraud detection mechanisms are employed during the transaction
process, some fraudulent activities may still go undetected. Post-transaction fraud detection
systems fill this gap by continuously analyzing transactions, account behavior, and other
indicators of fraud, even after the transaction is finalized.
The system typically uses advanced technologies like machine learning, artificial intelligence
(AI), data analytics, and rule-based algorithms to assess transaction histories, patterns, and
account behaviors to flag any anomalies or suspicious activities. It provides a second layer of
security, focusing on detecting irregularities such as abnormal spending patterns, unusual
account access, or unauthorized withdrawals.
These systems are essential in preventing potential financial losses, chargebacks, and legal
issues, as well as protecting customers and businesses from the negative impact of fraud. By
offering real-time alerts, investigations, and potential blocking of fraudulent activities, post-
transaction fraud detection enhances the overall security framework of the financial and
digital ecosystem.
1.1 Purpose
The purpose of a fraud detection system after a transaction is to identify and mitigate fraudulent
activities that may have bypassed initial security checks during the transaction process. Key
objectives include:
1. Post-Transaction Monitoring: The system continuously monitors transactions even after
completion to detect suspicious patterns or behaviors that indicate fraud (e.g., unusual account
activity or multiple transactions from different locations).

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2. Chargeback Prevention: It helps reduce the risk of chargebacks from customers disputing
fraudulent transactions, protecting both businesses and customers from financial losses.
3. Customer Protection: It ensures that customers are alerted to any unauthorized activities on
their accounts, allowing them to take immediate action.
4. Compliance and Reporting: The system assists organizations in complying with legal and
regulatory requirements related to fraud detection and financial reporting.
5. Reputation Management: Detecting fraud after transactions can help maintain customer trust
and safeguard the organization's reputation by showing proactive measures against fraud.
By monitoring and analyzing transaction data after they are processed, these systems reduce the
risk of ongoing or future fraudulent activities and help in investigations.
1.2 Motivation
The development of SafeTransact, a fraud detection system built on the MERN stack and
advanced machine learning, is driven by the growing need for secure online transaction systems.
The increasing sophistication of fraudsters has motivated the creation of a more robust and
intelligent solution. The following factors illustrate the necessity of this project:
1. Rising Threat of Online Fraud: As the volume of digital transactions increases, so do fraud
attempts. SafeTransact offers a cutting-edge solution to combat this growing issue with real-time
detection capabilities.
2. Challenges in Existing Systems: Many current systems are slow to detect fraud, often relying
on post-transaction analysis, which leaves businesses vulnerable. SafeTransact is designed to
overcome these challenges by implementing real-time detection and predictive analysis.
3. Convenience for Businesses: Companies require a reliable system that can detect fraud
without hindering legitimate transactions. SafeTransact delivers this through an easy-to-use
interface, integrated with machine learning models to ensure high detection accuracy.
4. Advanced Fraud Detection Algorithms: SafeTransact uses advanced machine learning
algorithms to detect complex fraud patterns that are often missed by conventional rule-based
systems.
5. Real-Time Monitoring and Alerts: Unlike traditional systems, SafeTransact provides instant
alerts when suspicious activities are detected, enabling businesses to act quickly.

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6. Personalized Fraud Detection: Using machine learning, SafeTransact adapts to the unique
transactional behaviors of different users and businesses, offering personalized fraud detection
solutions.
7. Scalability and Flexibility: Built on the MERN stack, SafeTransact is designed to scale with
increasing transaction volumes, making it suitable for businesses of all sizes. Its flexible
architecture ensures it can evolve to handle emerging fraud trends.
In conclusion, SafeTransact is motivated by the need to provide a modern, intelligent, and
scalable fraud detection solution for businesses and financial institutions. It aims to secure online
transactions and reduce financial losses by implementing advanced technologies and real-time
monitoring.

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…………………………………………………… Chapter-2
Market Survey

2.Market Survey
Post-transaction fraud detection systems play a crucial role in safeguarding financial
transactions. By analyzing data after a transaction has occurred, these systems can identify and
prevent fraudulent activities.
2.1 Compatible Study of Similar Solutions

S. Tools Advantages Disadvantages

No

NICE Actimize Advanced analytics for fraudComplex setup and high

1
detection and prevention. Real-cost
time monitoring and alert
capabilities.
SAS Fraud and RiskComprehensive platform for Steep learning curve and
2
Management fraud detection and risk expensive licensing.
management. Customizable
rules and models.
Fortinet Forti SIEM Security information and event May require additional
3
management (SIEM) solution integrations for specific
with fraud detection fraud detection needs.
capabilities.
IBM Security Guardium Database security solution Primarily focused on
4
with fraud detection database security, may lack
features. Monitors database specific fraud detection
activity for anomalies. features.
Some popular tools in the legal domain include:
Why Our Solution is Better Compared to Existing Tools:
1.Advanced AI and Machine Learning:
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Your system uses cutting-edge algorithms to detect evolving fraud patterns, significantly its
reducing false positives and improving accuracy over traditional systems.
2.Real-Time Post-Transaction Monitoring:
Continuous, real-time monitoring of transactions after completion, allowing businesses to
detect and act on fraudulent activity immediately, even after the transaction is finalized.
3.Customizable and Adaptive Rules:
Unlike rigid existing systems, your solution offers customizable detection rules and dynamic
thresholding that adapt to specific business needs and changing fraud trends.
4.Seamless Integration and Scalability:
The system is easy to integrate with existing platforms and scales effortlessly to handle growing
transaction volumes without performance issues.
5. Cost-Effective and User-Friendly:
It provides a lower total cost of ownership with user-friendly dashboards and actionable insights,
making fraud detection accessible and reducing operational costs.

Chapter-3
Requirements

5
3.Requirements
The requirement for the Fraud Detection System are categorized into functional, non-functional
hardware, and software specification to ensure that the system meets the expected performance,
usability, and compatibility standards.
3.1 Functional Requirements
1. Continuous Post-Transaction Monitoring:
The system must continuously monitor and it Analyze transactions after they are completed to
detect any suspicious activities or anomalies in real- time.
2. Anomaly Detection:
Use advanced machine learning to recognize abnormal it transaction patterns, comparing them to
typical behavior and flagging potential fraud.
3. Risk Scoring and Customizable Rules:
Assign a risk score to each transaction and provide a rules engine that allows businesses to set
and modify fraud detection criteria based on their specific needs.
4.Real-Time Alerts and Notifications:
Send instant alerts to administrators or customers when fraudulent activity is detected, with
customizable alert types and thresholds.
5. Fraud Case Management and Incident Tracking:
Provide case management system to track and investigate fraudulent transactions, including
maintaining a full audit trail of actions taken.
6. Integration with External Systems:
Seamlessly integrate with payment gateways, financial Systems and external data sources (e.g.,
device fingerprints, IP addresses) for more its comprehensive fraud detection.
7.Detailed Reporting and Analytics:
Offer real-time reports and analytics on fraud detection metrics, flagged transactions, and
patterns, along with a customizable dashboard for easy monitoring.
8.Scalability and High Performance:
Ensure the system can handle large transaction volume with high-speed processing, minimizing
delays in fraud detection and maintaining its manage performance during peak loads.

3.2 Non- Functional Requirements

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1. Performance and Scalability:
The system must handle large transaction volumes with minimal latency, ensuring fast fraud
detection and ability to scale to meet growing demands.
2. Security and Compliance:
Ensure strong data encryption, role-based access control, and compliance with regulations like
PCI DSS and GDPR to protect sensitive information and meet legal requirements.
3.Reliability and Availability:
The system should provide high availability, fault tolerance, and disaster recovery mechanisms,
ensuring continuous operation and quick recovery from failures.
4.Usability and Maintainability:
Offer a user-friendly interface and customizable dashboards while ensuring that the system is
easy to update, maintain, and adapt to new fraud patterns.
5.Interoperability and Integration:
Seamlessly integrate with external systems (payment gateways, CRMs) and provide APIs for
easy integration with third-party tools and business infrastructure.
3.3 Hardware Requirements
1.Server Requirements:
Processor: 3.0 GHz or higher, multi-core CPU.
RAM: 16 GB or higher.
Storage: 500 GB SSD for database and media storage.
Network: High-speed internet connection (1 Gbps).
2.User Devices:
Any modern desktop or mobile device with internet connectivity.
3.4 Software Requirements
1.Operating System:
Any OS supporting Node.js and Python (For machine learning), can easily run on Windows,
macOS, Linux.
2.Web Server:
Node.js for backend processing and API handling.
3.Database:
MongoDB for database management.

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4.Frontend Framework:
React.js for building a responsive and dynamic user interface.
5.Payment Gateway Integration:
Integration with secure payment gateways such as Razor pay, Stripe, or PayPal to
monitor Transaction in real time for fraud detection.
6.Version Control:
Git for source code management and collaboration.
7.Cloud Hosting:
AWS, Google Cloud or Microsoft Azure for hosting the frontend and ML components,
MongoDB Atlas for managing the database.
3.5 Agile Model
The Agile model is an adaptable and iterative approach to software development, ideal for
building systems that require rapid feedback and continuous improvement, such as a Fraud
Detection System. This method emphasizes incremental progress, close collaboration, and the
flexibility to respond to evolving requirements. By breaking down the project into manageable
sprints, the Agile model ensures that new fraud detection features and capabilities are developed,
tested, and refined in short cycles, enabling quick responses to emerging threats.
1.Iterative.Development:
The Fraud Detection System follows the Agile model, where development is divided into small,
incremental sprints. Each iteration focuses on building key fraud detection features, such
anomaly detection, machine learning algorithms, and post-transaction risk analysis iterative
approach ensures that potential issues can be detected and addressed early, improving the overall
system robustness.
2.Sprint.Planning:
Each sprint targets specific areas of the fraud detection system, such as enhancing transaction
monitoring, improving detection accuracy, optimizing real-time alerts. Features are prioritized
based on their potential impact on fraud prevention and the effort required for development
ensuring efficient resource allocation and timely delivery of key functionalities.
3.Continuous.Feedback:
Regular feedback loops are integrated through sprint reviews, where stakeholders, such as fraud
analysts and security teams, provide insights on the system effectiveness. This feedback is

8
critical in refining fraud detection algorithms and adapting the system to new fraud patterns,
keeping it aligned with evolving security needs.
4.Sprint.Retrospectives:
After each sprint, retrospectives are conducted to evaluate the development process. The team
reviews what worked well and identifies areas for improvement, such as refining detection
algorithms or enhancing response times. This phase fosters a culture of continuous learning,
allowing the team to enhance the system's accuracy and performance over time.
5.Adaptation:
The Agile model provides flexibility to quickly adapt to new fraud detection requirements. As
fraud tactics evolve, the system features can be updated and reprioritized in backlog, ensuring
that emerging threats are addressed swiftly. New fraud scenarios or transaction behaviors can
integrated into the system’s detection models in future sprints.
6.Team.Collaboration:
Agile emphasizes strong collaboration among cross- functional teams, including developers, data
scientists, fraud analysts, and business stakeholders. This close teamwork ensures that all aspects
of fraud detection from data collection to transaction monitoring and alerts are built in alignment
with user expectations and business goals.
7.Incremental.Releases:
At the end of each sprint, the team delivers incremental releases of the fraud detection system,
with new or improved features such as enhanced transaction scoring or more precise alert
mechanisms. These regular releases provide stakeholders with clear view of system progress,

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 Chapter-4
System Architecture

4. System Architecture Fig 3.1 – Agile Model

The Fraud Detection System is designed using a Client- Server Architecture to ensure Efficient
communication, data management, andprocessing. This architecture separates the client and
server components, enabling a scalable and modular structure for the application.
4.1 Client-Server Architecture
Client:
The client serves as the front-end interface where users, such as bank employees or
security teams, interact with the fraud detection system. Users can upload transaction data, view
fraud analysis results, and generate reports through web-based interface. The client is responsible
for sending transaction data and user inputs to the server for processing and receiving
fraud detection results and reports in return.
Server:
The server performs the core processing tasks, including transaction validation, detection risk
scoring, and fraud categorization. It manages the database of transaction records, run fraud

10
detection algorithms (e.g., machine learning models), and sends the results back to the client
server ensures data security and manages the storage of transaction logs and analysis reports.
Communication Flow:
1.Request.from.Client:
The client sends a request to the server, such as uploading transaction …details for analysis
Querying the status of flagged transactions.
2.Processing.on.Server:
Server processes the request by running fraud detection algorithms,performing tasks such as as
pattern recognition,anomaly detection, ..and generating risk scores for the transaction.If any
suspicious activities are ..detected, the system categorizes them as potential fraud.
3.Response.to.Client:
The server sends the processed results back to client.This includes fraud …detection
results(e.g flagged transactions),risk analysis reports , and any …recommended actions ….for
investigation.This architecture ensures that …the Fraud Detection System can ….efficiently
handle large volumes of …transactions and user requests simultaneously.The ….system can be
easily …scaled by upgrading server resources,ensuring realtime fraud ….detection …and
analysis for a wide range of transactions

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 Fig. 4.1 Client-Server Architecture

Chapter-5
Design and Implemetation

5. Design and Implementation

This section outlines the design and implementation strategies for the Fraud Detection
System,focusing on the integration of various components to deliver the desired

12
functionalities. The system is built to provide a user-friendly interface and efficient processing
capabilities, ensuring that users can easily navigate and utilize the features for Fraud analysis.
5.1 Product Features
1. User-Friendly Interface:
a. clean and easy-to-use interface that allows users, such as financial institutions and
businesses, to submit transactions for fraud analysis with ease.
b. Users can view transactions details, real time fraud detections alerts and history in a well-
organized dashboard.
2. Nearby Real Time Fraud Detection:
c. The system analyzes transactions in real-time, flagging suspicious activities based on
predefined rules and machine learning models.
d. Immediate alerts are sent to users for transactions identified as potentially fraudulent,
allowing quick action to be taken.
3. Transaction Management:
e. Users can track the status of each transaction, including whether it has been flagged for
potential fraud or cleared as safe.
f. Users can review flagged transactions and provide feedback (e.g., marking them as
legitimate or fraudulent), helping improve future detection accuracy.
4. Machine Learning Integration:
g. The system leverages machine learning models to continuously analyze patterns in
transaction data, detecting anomalies that may indicate fraud.
h. Feedback from users on flagged transactions is used to retrain and improve the accuracy of
fraud detection models.
5. Secure Payment Processing:
i. SafeTransact ensures that all payments are securely processed via trusted gateways,
minimizing risks related to compromised transactions.
6. Reporting and analytics:
j. Users can generate reports that provide insights into transaction volumes, fraud detection
rates, and response times.
k. The system provides an analytics dashboard for admins and businesses, displaying trends in
fraudulent activity and transaction performance.

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7. Mobile Responsive Design:
l. The platform is optimized for mobile use, ensuring that users can manage transactions, view
alerts and handle fraud detection tasks from anywhere.
8. Secure Authentication and User Profiles:
m. Users can create accounts, log in securely, and manage their profiles. The system stores
personal information, transactions history, and saved flagged transactions for future use.
5.2 Data flow diagram
5.2.3 Dataflow Diagram (Level 0)

Fig 5.2.1 Dataflow Diagram (Level 0)

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5.2.2 Dataflow Diagram (Level 1)

Fig 5.2.2 Dataflow Diagram (Level1)

15
Fig 5.2.3 Dataflow Diagram (Level 2)

16
5.3E-R diagram

Fig 5.3 ER Diagram

17
5.4 Class diagram

Fig 5.4 Class Diagram

18
5.5 Use.Case.Diagram

Fig 5.5 Usecase Diagram

19
5.6Sequence diagram

Fig 5.6 Sequence diagram

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 Chapter-6
UN sustainable development goals

6. Mapping with UN sustainable development goals

SafeTransact, as a fraud detection system , can align its objectives and operations with several
UN Sustainable Development Goals to promote sustainability in the banking and financial
industry. Below is a mapping of SafeTransact with relevant SDGs:

1. Goal 8: Decent Work and Economic Growth

 Relevance: SafeTransact promotes secure online transactions, enhancing trust in digital

financial services, which can lead to job creation in tech and finance sectors..
 Action: Develop partnerships with local businesses and financial institutions to provide
training programs focused on fraud detection and secure transactions.

2. Goal 9: Industry Innovation, and Infrastructure

 Relevance: By implementing advanced machine learning algorithms for fraud detection,

SafeTransact contributes to innovative financial technologies.
 Action: Invest in R&D to continuously improve the fraud detection system, ensuring it
remains cutting-edge and accessible to users.

3. Goal 12: Responsible Consumption and Production

 Relevance: The project encourages ethical and responsible use of digital payment systems
by educating users about secure practices.
 Action: Create awareness campaigns that inform users about the importance of secure
transactions and recognizing fraudulent activities.

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4. Goal 16: Peace, Justice, and Strong Institutions

 Relevance: Safe Transact promotes transparency and accountability in financial

transactions, aligning with efforts to reduce fraud and enhance security.
 Action: Implement rigorous monitoring and reporting mechanisms for fraudulent activities,
and collaborate with regulatory bodies to strengthen financial security measures.

5. Goal 17: Partnerships for the Goals

 Relevance: SafeTransact can collaborate with tech companies, NGOs, and governments to
enhance cybersecurity and fraud prevention initiatives.
 Action: Foster partnerships with cybersecurity experts and financial institutions to share best
practices and resources for fraud detection and prevention.

Implementation Strategies

 User Education: Provide resources and training to users about identifying and avoiding
fraud in digital transactions.
 Community Engagement: Develop initiatives that encourage users to report suspicious
activities, creating a collaborative environment for fraud prevention.
 Regular Updates: Ensure that the fraud detection algorithms are updated regularly to
address emerging fraud trends, improving overall user security.

(There are 17 goals decided by Department of Economic and Social Affairs for Sustainable
Development. The 2030 Agenda for Sustainable Development adopted by 193 Member States at
the UN General Assembly Summit in September 2015, and which came into effect on 1 January
2016.)
(In our respect each project should be mapped with any of the 17 goals of SDG.)
In this chapter you must write how your project is connected with SDG and how you are
providing solutions of the problems indicated by SDG.

22
SDG Title : Industry, Innovation, and Infrastructure

S. Product Objective Proposed Solution Mapping

No
3/2/1

Continuously improve and innovate Invest in R&D for advanced 2

1
fraud detection mechanisms to stay machine learning algorithms
ahead of cybercriminals to detect fraudulent
transactions more efficiently

SDG Title : Peace, Justice, and Strong Institutions

S. Product Objective Proposed Solution Mapping

No
3/2/1

Strengthen fraud detection Implement monitoring and reporting 2

2
systems to ensure mechanisms fraudulent activities,
transparency and security in allowing users and admins to flag
financial transactions suspicious transactions in real-time

Chapter-7

23
 Conclusion & Future Scope

7.Conclusion & Future Scope

Conclusion
A robust post-transaction fraud detection system is crucial for protecting financial institutions
and customers from fraudulent activities. By using advanced technologies such as anomaly
detection, machine learning, and real-time risk scoring, the system can quickly identify
suspicious transactions and take proactive steps to prevent fraud. Its ability to learn continuously
from transaction patterns and adapt to new fraud tactics ensures ongoing protection against
evolving threats.
Additionally, the system offers features like automated alerts, customizable rules, and
detailed reporting, allowing organizations to tailor it to their specific needs while ensuring
compliance with industry standards. The system is scalable, ensuring that as transaction volumes
increase, its performance and effectiveness remain optimal.
In conclusion, a post-transaction fraud detection system is essential for safeguarding financial
integrity, enhancing customer trust, and ensuring timely intervention in fraud cases, ultimately
creating a more secure transaction environment.

Future Scope
1.Enhanced.AI.and..Machine..Learning..Models:
Advanced AI and machine learning algorithms will continue to evolve, improving their ability to
learn from complex datasets. These models will become more accurate at predicting fraudulent
activities, detecting previously unseen fraud patterns in real time through continuous updates and
refinements.
2.Integration.with.Blockchain.Technology:
Blockchain's decentralized and transparent nature can offer more secure transaction
environments. Fraud detection systems could use blockchain for immutable audit trails and
secure validation of transaction histories, reducing opportunities for fraud.

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3.Behavioral.Biometrics:
Future fraud detection systems may incorporate behavioral biometrics (such as typing speed,
mouse movement, and device orientation) to detect anomalies. This additional security layer can
help identify fraud even before transactions are completed.
4.Predictive.Analytics:
Moving toward prevention, predictive analytics could forecast potential fraud based on user
behavior and historical transaction patterns. This proactive approach will enable businesses to
prevent fraud before it occurs, significantly improving system security.
5.Cross-Platform.and.Global.Integration:
With the increasing interconnectedness of global financial systems, fraud detection systems will
integrate across platforms and jurisdictions, facilitating better tracking of fraud schemes across
borders and enabling real-time data sharing for enhanced international cooperation.
6.Real-Time.Fraud.Mitigation:
Future systems will focus on real-time mitigation techniques, automatically blocking or
freezing suspicious transactions before completion, using advanced pattern recognition and
decision-making algorithms.
7.Increased.Automation.in.Case.Management:
Automation will handle many low-risk fraud cases, using AI to triage cases and recommend
actions. This will free up human analysts to focus on complex cases, improving response time
and operational efficiency.
8.Quantum.Computing.for.Faster.Processing:
As quantum computing becomes more practical, fraud detection systems can leverage its
immense processing power to analyze vast amounts of transactional data in real time,
dramatically reducing the time needed to detect and prevent fraud.
9.Improved.User.Experience:
Fraud detection systems will aim to minimize false positives while maintaining robust security.
More seamless authentication methods, like biometric authentication, will enhance the user
experience without compromising fraud protection.
10.Regulatory.Adaptation.and.Compliance:
As global regulations around data privacy and financial security evolve, fraud detection systems

25
will need to adapt continuously. They will integrate mechanisms to ensure compliance with
evolving standards like GDPR and PSD2, while maintaining high levels of fraud protection.

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