The Fundamental Limits of Fraud Detection in Card Payment Networks

arXiv:2605.27557v1 Announce Type: new Abstract: Card payment fraud detection is usually framed as a supervised classification problem. Although this approach has generated practical progress, improvement has remained incremental despite major advances in model architecture. We argue that this is not mainly a failure of function approximation or optimization, but a consequence of structural information impairments inherent to the payment ecosystem. We formalize card authorization as a sequenti