Fatwa ID: 09272
Answered by Mufti Yusuf Badshah
Question:
Assalamu ʿalaykum wa raḥmatullāhi wa barakātuh,
I hope you are well. I am writing to seek a Shariah opinion regarding the permissibility of accepting employment at a fintech company that operates a Buy Now Pay Later (BNPL) service. I would appreciate your guidance after reviewing the brief details below.
1. Nature of the Company’s Service
The company operates a fintech platform that provides BNPL services through a mobile application. Customers can use the app to pay for products from partner merchants, similar to using a debit or credit card.
Customers have two payment options:
– Full Payment: The customer pays the entire amount immediately through the app.
– Installment Option: The customer may pay the purchase amount over three months, advertised as interest-free, with no increase to the original purchase price.
2. Late Payment Fee
If an installment payment is missed, a late payment fee (LPF) is charged. The structure is approximately as follows:
– Installments up to 1,000 – LPF 500
– Installments up to 5,000 – LPF 1,000
– Installments above 5,000 – LPF 1,500
Additional details:
– There is a 3-day grace period where no LPF is charged.
– The company may waive the late payment fee if the customer contacts them and settles the payment.
– These late fees make up approximately 5% of the company’s revenue.
3. Rescheduling Fee
If a customer wishes to change the installment payment date, a rescheduling fee of 500 is charged.
4. Revenue Model
The company’s main source of revenue is merchant commissions. When customers purchase from partner merchants through the app, the merchant pays a contractually agreed commission to the company for facilitating the transaction.
5. Company Financing
The company also receives inter-company loans from its overseas holding company and pays approximately 0.6% interest on these funds.
6. Job Role
The role offered is Legal Officer. Responsibilities include:
– Drafting and reviewing contracts with merchants and freelancers
– Managing vendor and partnership agreements
– Advising on regulatory compliance and payment systems
– Handling legal risk management and dispute resolution
– Supporting corporate governance and internal legal policies
The role does not involve handling financial transactions, collecting late fees, or managing interest-based financing, but focuses on legal and contractual matters.
7. Clarifications Requested
I would appreciate guidance on the following:
1. Is the BNPL model described above Shariah compliant, given that installments are interest-free but late payment fees exist?
2. Does the presence of late payment fees and interest-based inter-company loans affect the permissibility of the business?
3. Is it permissible to work as a Legal Officer in such a company if the role does not directly involve financial or interest-related activities?
4. Would it be permissible for a customer to use this BNPL service if they either pay immediately or ensure installments are paid on time?
5. Does the company’s internal interest-based borrowing affect the permissibility for customers using the service?
Jazakum Allahu khayran for your time and guidance.
Wa ʿalaykum as-salām wa raḥmatullāhi wa barakātuh.
Kind regards
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
1) Late payment fees constitute Riba, which is impermissible [1]. Thus, the existence of late payment fees means the BNPL model as a whole is not Shariah compliant.
2) The existence of late payment fees affects the permissibility of the business for those who own the business or work directly with the collection and enforcement of late payment fees or the payment of interest-based loans.
3) From the information you have provided, it would appear your role as a legal advisor is permissible given that you are not directly involved in handling the late payment fees or interest-based loans [2].
4) It would be permissible for customers to use this service provided they ensure all payments are made on time.
5) The company’s interest-based borrowing does not affect the permissibility for the customer.
While your job may be permissible, it would be best for you to continue to seek out a better and more Halal employment that does not require you to engage with a company which is involved in Haraam transactions [3].
Only Allah ﷻ knows best.
Written by Mufti Yusuf Badshah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
[1]
بَابُ الرِّبَا هُوَ لُغَةً: مُطْلَقُ الزِّيَادَةِ وَشَرْعًا (فَضْلٌ) وَلَوْ حُكْمًا فَدَخَلَ رِبَا النَّسِيئَةِ وَالْبُيُوعُ الْفَاسِدَةُ فَكُلُّهَا مِنْ الرِّبَا فَيَجِبُ رَدُّ عَيْنِ الرِّبَا لَوْ قَائِمًا لَا رَدُّ ضَمَانِهِ لِأَنَّهُ يُمْلَكُ بِالْقَبْضِ قُنْيَةٌ وَبَحْرٌ (خَالٍ عَنْ عِوَضٍ)
Raddul Muhtar, vol. 5, pg. 168-169, Darul Fikr
الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَن جَاءَهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ
Surah Al-Baqarah 275
يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ ۞ فَإِن لَّمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِّنَ اللَّهِ وَرَسُولِهِ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ
Surah Al-Baqarah 178-179
حَدَّثَنَا مُحَمَّدُ بْنُ الصَّبَّاحِ، وَزُهَيْرُ بْنُ حَرْبٍ، وَعُثْمَانُ بْنُ أَبِي شَيْبَةَ، قَالُوا حَدَّثَنَا هُشَيْمٌ، أَخْبَرَنَا أَبُو الزُّبَيْرِ، عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ
Sahih Muslim 1598
[2]
قَوْلُهُ وَجَازَ تَعْمِيرُ كَنِيسَةٍ) قَالَ فِي الْخَانِيَّةِ: وَلَوْ آجَرَ نَفْسَهُ لِيَعْمَلَ فِي الْكَنِيسَةِ وَيُعَمِّرَهَا لَا بَأْسَ بِهِ لِأَنَّهُ لَا مَعْصِيَةَ فِي عَيْنِ الْعَمَلِ
Raddul Muhtar, vol. 6, pg. 391, Darul Fikr
[3]
عَنْ عَبْدِ اللَّهِ بْنِ مَسْعُودٍ قَالَ: قَالَ رَسُولُ اللَّهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ: «طَلَبُ كَسْبِ الْحَلَالِ فَرِيضَةٌ بَعْدَ الْفَرِيضَة»
Mishkat Al-Masabih 2781