1.1 Introduction
An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. Much of today’s consumer activity depends upon plastic. Credit cards and debit cards are used to purchase products and services as well as to withdraw cash from Automated Teller Machines (ATMs). In order for a card transaction to be approved, the ATM, retailer, or food establishments must submit the request, and the bank that issued the card must authorize the purchase or cash withdrawal. Furthermore, this approval must be provided in real- time since the customer is waiting for it. A key problem is quickly identifying suspicious or fraudulent uses so that those transactions can be rejected and the card suspended. A card transaction is captured by such devices as a point of sale (POS) terminal in a store, a customer’s browser communicating with a website, or an ATM.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Banks and financial institution have always been targets for criminals. However, in today’s progressive technology age and given the exponentially growing online crime activity, financial institutions are finding it difficult to stay ahead for the curve and mitigate risks from fraud. ATM Manufacturers provides card issuers with real time monitoring technology and high performance analysis to protect them against losses from fraudulent card usage. They also detect and prevent fraud utilizing credit cards and debit cards at ATMs as well as Card- Not- Present fraud.
In addition to brick –and mortar stores and other physical locations such as mall kiosks, the provider’s services online merchants that receive credit or debit card information over the internet from a customer’s browser. This information is sent from the merchant’s website to the switching provider’s computers, and authorization proceeds as described above.
The provider’s switch also routes ATM transactions for many tens of thousands of ATM devices for authorization. ATMs are controlled by a servicing bank. If a servicing bank receives and ATM request involving a card that the bank did not issue, the request details are sent to the provider’s switch, which handles the request in the same way that it handles POS transactions. The data is sent to the issuing bank, and authorize/reject response is returned via the servicing bank to the ATM. Identifying fraudulent transaction typically takes hours or days, and many such transaction may slip through before a hold can be put on the card.
The information can be quickly shared with thieves in multiple countries, they can rapidly attack via multiple avenues by submitting many different types of transactions simultaneously, anticipating that the lesser (Slower, etc) infrastructure that some of them may take will allow at least some them to get through successfully. Recognizing this problem, the switching –service provider decided to provide a capability to the issuing banks to flag in real time that transaction that appeared to be suspicious, and possibly fraudulent. In this way, at the bank’s option, suspicious or fraudulent transactions were identified and rejected much eelier and faster than previously possible.
1.3 Statement of Problem
Investigation revealed that the ATM channel remains one of the most vulnerable targets for fraud schemes. Fraudsters can take advantages of stolen or forged ATM cards in order to withdraw funds from customers’ accounts, quickly liquidizing fund while leaving minimal tracks. This problem has, of course, exploded with the high speed nature of electronic submission of credit and debit transactions. Online purchases may be fraudulent if the credit card number, expiration date, and CID number are copied from the card. This copying can easily be done, for example, by a waiter taking a customer’s credit card to pay for a meal or when a phone order is placed and paid for with a credit card.
1.4 Aim and Objective of the Study
The main aim of the study is to develop and encoded technique for fraud detection in Automated Teller Machine (ATM). In achieving this aim, the following specific objectives were laid out as follows:
- To develop a new algorithm for ATM fraud detection in credit cards.
- To develop an Automated Teller Machine (ATM) that will reduce fraud.
- To discuss the way which ATM fraud can be detected and the technology and application of ATM.
- To design an application software that will aid in monitoring and controlling of fraudulent.
1.5 Significance of Study
ATMs are an advancement of technology and most of the online transitions have added almost everything that deals with buying and selling to ATMs. The challenges faced day to day is the security aspect of the system. If the system can be effective, there is need to review the methods of fraud and how to detect frauds.
The design and implementation of an automated crime detection in ATM machine would lead to an effective and comprehensive fraud control in banking sectors. For examples, computerized verification of illegal access of customers accounts, computerized verification of signatures. In a matter of seconds the computer system enhanced to do all these tasks, then all criminal and fraud minded people will desist from such acts.
1.6 Scope of the Study
The scope of the researcher is focused on the Detection of Fraud in ATM in Nigeria Bank and other financial institutions.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.8 Definition of Terms
ATM (Automated Teller Machine): is an electronic telecommunication device that enables the customers of financial institution to perform financial transactions, particularly cash withdrawal, without the need for a human cashier, clerk or bank teller.
Personal identification number (PIN): is a numeric password used to authentic ate a user to a system, in particular in association with an ATM card
POS: The point of sale (POS) is the time and place where a retail transaction is completed. It is the point at which a customer makes a payment to the merchant in exchange for goods or after provision of service.
Hybrid Computers: are computers that exhibit features of analog computers and digital computers
Simulation: is the imitation of the operation of a real –world process or system over time.
Feasibility: means to objectively and rationally uncover the strengths and weakness of an existing business or proposed venture, opportunities.
Scalability: is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate the growth.
Efficiency: ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result.
Fraud: Is defined as deception deliberately practiced with a view of gaining an unlawful or unfair advantage.
