Implementation of AI-Based Support Vector Machine Algorithm for Fraud Detection in Digital Payment Systems

The increasing use of digital payment systems has led to a rise in fraudulent activities, presenting a significant challenge in ensuring secure transactions. This research focuses on implementing the Support Vector Machine (SVM) algorithm with a Radial Basis Function (RBF) kernel to detect fraud in digital payment systems. One of the main challenges addressed in this study is the severe class imbalance in the dataset, where fraudulent transactions account for only 0.17% of total transactions. To overcome this, the SMOTE (Synthetic Minority Over-sampling Technique) method was applied to balance the dataset, allowing the model to better recognize fraudulent patterns. The results indicate that the SVM model achieved an accuracy of 99.93%, with a precision of 86.23% and a recall of 75.51%. These results demonstrate that SVM, combined with SMOTE and RBF kernel, is highly effective in detecting fraudulent transactions while minimizing false positives. This research provides a strong foundation for improving fraud detection models in the context of digital payment systems, offering enhanced security and trust for users. Further research could explore hybrid models and real-time data analysis to improve performance.