Hybrid Classical–Quantum-Inspired Neural Network with Simulated Variational Circuit for Credit Card Fraud Detection

Abstract

Credit card fraud detection remains a challenging binary classification problem because fraudulent transactions are rare, transaction patterns are complex, and false negatives may have important operational consequences. This study presents a Hybrid Classical–Quantum-Inspired Neural Network (HCQNN) with a simulated variational quantum circuit for credit card fraud detection. The proposed framework combines classical preprocessing, SMOTE-based class balancing, neural network-based feature learning, and quantum-inspired variational feature transformation. The model was evaluated using the Credit Card Fraud Detection dataset after applying SMOTE to the training data and was compared with three classical baseline classifiers: Logistic Regression, Decision Tree, and Linear Support Vector Machine. The experimental results show that the proposed HCQNN achieved an AUC of 97.85%, precision of 91.20%, recall of 90.10%, and an F1-score of 90.64%. These values indicate improved classification balance, particularly in the detection of minority-class fraud cases, compared with the selected baseline models. Training and validation behaviour also showed stable convergence, with training and validation accuracies exceeding 96% and 95%, respectively. Since the variational quantum circuit was simulated on classical hardware, the findings should be interpreted as evidence of the value of hybrid feature learning and quantum-inspired transformations rather than as proof of quantum computational advantage. The study provides a basis for further evaluation using broader datasets, additional baseline models, and real quantum hardware.