Fatwa: # 42876
Category: Business Matters
Country:
Date: 4th September 2019

Title

Are cash backs and rewards received through Credit card and E wallet permissible?

Question

Assalamualaikum

I have a question on cash back on purchase, the cash back is given by the E-wallet or credit card company not by the seller.Is it permissible to get cash back due to use of credit card or e-wallet from specific shops offered by the e-wallet company or credit card company?

For example a e-wallet company offers upto 20% cash back for buying from a specific shop through their e-wallet and for every purchase the e-wallet company deposits the cash back money in my e-wallet account. Here the shop doesn't pays me in cash where else the e-wallet company pays me. is is permittet according to Islam.

Jazakallah-hu-khayair

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

You enquire about two issues. Cashback received from a Credit Company and the cashback offered by Electronic Wallets.

With the advent of technology, the use of digital payments is on rise. This mode of payment is a method of value exchange in electronic commerce., where the value is transferred via the internet and communication technology. This electronic system started at the end of 1996 and in the earlier part of 1997.[i]

The term "cash back" is defined as the percentage of a credit card purchase returned back to the cardholder, in the form of a cash reward.

Hereunder, is a brief explanation of the procedure of cashbacks:

Credit card:

When a cardholder uses his credit card for a payment or purchase from specific outlets, the credit card provider charge an interchange fee, which is essentially a fee paid by the shop to the bank to process the transaction.[ii] [iii] The bank then shares a part of this fee with the consumer which is referred to as Cashback.

The Credit card holders earn cash back in various ways, for example by making deposits etc. Some credit cards credit the amount you earned onto your statement, reducing your credit card bill. Some let you convert it to points and rewards.[iv] Cash back rewards are actual cash that can be applied to a credit card bill or received as a check or bank account deposit. All this is done to incentivize customers to use credit cards for their transactions, rather than cash. This way, the customer is tempted to spend more than what he affords to repay comfortably and thus, consequently pays interest due to the delay in making timely payment.

The reality of cash back is that the bank is merely relieving the customer of his debt by allowing him to pay less than what he owes to the bank as an act of goodwill. This is permissible. Cash back can also be regarded a gift.[v]

Electronic Wallet:

The electronic wallet is a digital application which organises payments digitally, and it includes a wallet which stores the user’s details in an encrypted form on the application or the server of the payment wallet company. The user of these wallets can also receive and send money through the wallet and can also make purchases and pay bills using the payment wallet.

Upon making payment using the e wallet, the user receives a cash back of a few percentages on the total invoice. For every payment done, the company receives a certain commission, depending on the type of the product, from the respective store. Similarly, the wallet company receives commission from the service provider when one pays his water and electricity bill using an e wallet account. There are many other ways through which these companies earn money such as providing marketing platform to various companies for them to advertise their product etc.[vi]

The cash backs offered by E wallet companies are also regarded as a gift and thus permissible.

 

And Allah Ta’āla Knows Best

Naved Akhtar ibn Shabbir

Student - Darul Iftaa

Shillong, India. 

Checked and Approved by,

Mufti Ebrahim Desai.

______

 

[i] Credit Card security and E- Payment by Jithendra Dara & Laxupon Gundemoni.

 

[v] قضايا فقهية معاصرة في المال و الإقتصاد للدكتور نزيه حماد، ص ١٥٩ 

يمنح بعض مصدري بطاقات الائتمان جوائز و هدايا لعملائهم من حملة البطاقات لمناسبات مختلفة ، منها : إنضمامهم لعضوية البطاقة أو تقديمهم لعملاء جدد أو لإنتظامهم في السداد.

و إنني لا أرى حرجا شرعا في هذه الجوائز و الهدايا إذا كانت على سبيل التبرع من مصدر البطاقة بقصد ترويج البطاقة و تشجيع إستخدامها دون إشتراط ذلك عليه ، لأنها تبرع من الكفيل إلى المكفول عن طيب نفسه و ليس فيها معنى الربا و لا شبهته و لا ذرائعه

 

بطاقة الائتمان المصرفية لنواف عبد الله باتو باره

أما حالات السحب النقدي من قبل حامل البطاقة فهو خدمة اقراض من مصدرها و لا حرج فيه شرعا إذا لم يترتب عليه زيادة ربوية و لا يعد من قبيل الزيادة الربوية الرسوم المقطوعة ألتي لا تترتب بمبلغ القرض أو مدته مقابل هذه الخدمة و كل زيادة على الخدمات الفعلية محرمة لأنها من الربا المحرم شرعا .

 

 

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