English
From the earliest times, people have engaged in the exchange of various commodities through different forms of trade and sale. There are two main types of sales: spot sales and deferred sales.
Within these categories, there are subtypes such as spot Musawamah, deferred Musawamah, spot Murabaha, and deferred Murabaha, among others. In some cases, buyers may not have sufficient funds to purchase a commodity immediately. '
In such situations, they can opt for a deferred payment arrangement. A common example of this is the 'buy now, pay later' model. Today, a significant number of transactions are conducted on a deferred basis, reflecting the growing popularity of this payment structure.
Read more about: How Musawmah Differs From Murabha ?
BNPL (known in Arabic as Bai Muajjal) is a type of sale in which the goods are delivered immediately, but payment is deferred to a future date. This type of sale is typically conducted on a Musawamah basis, meaning the cost of the goods is unknown to the buyer at the time of the transaction.
However, in modern applications, particularly in Islamic financial institutions, BNPL is often executed on a Murabaha basis, where the cost of the goods is clearly disclosed to the buyer during the transaction. (Usmani, 2015)
Paying later is not considered haram, provided the buyer takes possession of the goods after the sale is executed. This possession can be either actual or constructive (Fiqh-Othmani-1 (1), n.d.).
However, if the buyer and seller complete the sale and separate without the buyer taking possession of the goods, this is classified as Bai al-Khali bil-Khali, which is prohibited in Shariah.
As mentioned in a Hadith, the Prophet (P.B.U.H) forbade Bai al-Khali bil-Khali, where neither the buyer takes possession of the goods nor the seller receives the payment. (Al-Othmani, 2013)
From a Shariah perspective, installment payments are not considered haram, as long as there is no interest charged in the event of late payment. However, if the agreement includes a condition of interest, the installment arrangement would be deemed haram.
Traditional credit often involves factors such as usury (riba) and additional charges for late payments, both of which are prohibited under Shariah law.
In contrast, BNPL can be considered a Shariah-compliant transaction, provided it aligns with Shariah principles and is free from any violations, such as the inclusion of riba or other impermissible charges.
BNPL (Buy Now, Pay Later) itself is a Shariah-compliant transaction if executed with Shariah-compliant terms and conditions.
However, if there are limitations or issues with the BNPL arrangement, the buyer has the option to enter into a spot sale, where payment and delivery of goods occur immediately. (Al-Othmani, 2013).
Yes, BNPL will be considered halal if executed with the following terms and conditions:
1- The price of the subject matter must be determined at the time of the transaction.
2- The installment payment schedule must be fixed and known in advance.
3-Once the price is fixed it can not be decreased in early payment nor can be increased in delay payment.
4- Delayed payments should not incur any penalties or additional charges.
If BNPL is executed without adhering to any of the above conditions, it will be considered non-halal.(Usmani, 2015)
If there are no interest charges or additional fees on the principal amount of the subject matter, then Buy Now Pay Later (BNPL) is considered halal.(Al-Othmani, 2013)
The Buy Now Pay Later (BNPL) process works as follows:
1- The client approaches the seller and requests to purchase the subject matter on a deferred payment basis.
2- The seller agrees and offers the subject matter for 20,000 AED to be paid over six months.
3- The client accepts the offer and takes possession of the goods. Once possession is taken, the sale is considered complete.
Yes, Buy Now Pay Later (BNPL) is considered a form of debt in Islamic finance. Once the sale is executed, the buyer becomes liable for the payment of the subject matter, which creates a debt obligation in accordance with Islamic financial principles.(Usmani, 2015)
BNPL and an interest-free loan are two different concepts.
An interest-free loan, or Qarz (قرض): is a form of Aqd-e-Tabarru (عقد التبرع), which involves lending money to someone with the expectation of receiving only the principal amount back, without any interest.
In contrast, BNPL (Buy Now, Pay Later) is an Aqd-e-Bai’ (عقد البيع): a sale contract where there is an exchange of two different commodities: money for goods. While an interest-free loan is a gift-like transaction, BNPL involves a sale with deferred payment terms.
According to the four Sunni schools of thought and the majority of Muhaddithin, Buy Now Pay Later (BNPL) is considered a Shariah-compliant sale if executed with all the necessary terms and conditions.
The evidence for this view is that a person who owns goods is authorized to sell them immediately for 2,000 AED or 3,000 AED, as he chooses.
Similarly, he is also permitted to sell the same goods on a deferred basis for 2,000 AED or 3,000 AED, provided that the price and payment schedule are clearly determined at the time of the contract.(Al-Othmani, 2013)
References
- Al-Othmani, م. ت. ا. M. T. (2013). Qadaa Fiqhiyyah Mu’asirah (p. 277).
- Fiqh-othmani-1 (1). (n.d.).
- Usmani, M. I. A. (2015). Maktaba Ma’ariful Quran (Quranic Studies Publishers). 342.
Disclamer:
This post is for educational purposes only, and the Firm does not directly or indirectly provide these services.
