Q. Kindly throw
some light on the use of credit cards, which are floating in the market.
Majority of these cards belong to Professional banking institutions, such
as American Express, City Gold Card etc. However, some cards are issued
by companies such as Diners club etc, which are not themselves banking
institutions. Please explain the ruling of Shariah about both these cards.
In your reply please cover both the aspects of using credit cards, first
as holders of the card, used to offset the purchase price and second,
when we accept these cards as sellers.
(Muhammad Salman, Karachi)
A. The use of credit card by a purchaser is allowed in Shariah,
no matter whether the card is issued by a banking institution or some
other company. However, the following points must be borne in mind in
this respect :
(i) The best way of using these cards is to open an account wherefrom
all the amounts owing are debited by the issuing company to avoid the
possibility of default which may in some cases, carry the risk of interest.
(ii) If the system of direct debit is not arranged, one must always
be careful that he pays the bills within the stipulated time without fail,
so that interest may not be imposed upon him.
(iii) The annual fee paid by a card-holder to the card-issuing
company is not interest, rather it is a free charged for certain services
rendered by the company for the benefit of the holder. That is why it
is charged irrespective of the amount actualy spent by the holder.
The second question is whether it is permissible for a seller to accept
credit card. This question has been a point of debate between the contemporary
scholars of Islamic jurisprudence. Some of them are of the view that the
amount charged by the card-issuing company to the shopkeeper is analogous
interest. They say that it is equal to discounting a bill of excha- nge,
hence not allowed in Shariah.
However, some other scholars are of the opinion that it is not interest.
On the contrary, it is a fee charged by the company for certain efforts
undertaken by it. Firstly, the company has to do a lot of work for the
benefit of the seller. Therefore, the commission charged by it is similar
to the commission of a broker which is undoubtedly permissible. This commission
is different from discounting a bill of exchange, because the rate of
discount in a bill of exchange is always tied up with the period of its
maturity, while the commission charged by the company from the merchant
is not so linked. This commission is determined irrespective of the time
on which the card holder shall pay the amount to the company. Therefore,
it is just like a commission charged for brokerage services.
In my personal opinion, the second view seems to be more preferable.
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