What if your bank offered you a financial incentive? How much money would make the additional time spent on every transaction worthwhile?
The University of Delaware’s Bintong Chen and Deshen Wang are tackling this problem in their latest research. Working with Jing Chen of Canada’s Dalhousie University, the team has created a system of consumer incentives that encourage individuals and merchants to engage in practices that significantly reduce the risk of credit card fraud.
In “Credit card fraud detection strategies with consumer incentives,” a paper published in Omega, The International Journal of Management Science, the team applied this strategy to data from a major European bank. The data included almost 285,000 transactions made over a two-day period.
According to the team’s analytical models, this incentive strategy would pay off if put into action. Their results found that the strategy could increase profits and consumer surplus by about 10 percent, outperforming current fraud detection systems.
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