Article provider by : Pn. Marziati Md Din

Author : Dr Azrul Azlan Iskandar Mirza, Fakulti Ekonomi & Muamalat, Universiti Sains Islam Malaysia

Source : PORTAL RASMI MUAMALAT DAN KEWANGAN ISLAM , JABATAN KEMAJUAN ISLAM MALAYSIA (JAKIM)

 

The Industrial Revolution 4.0 is exploding with the latest technologies to replace traditional technologies. It not only touches on the aspects of computing and communication technology, but absorbs into all aspects of life including engineering, medical, social, economic, financial and political.

Fintech refers to the latest financial technology (financial technology). Blockchain, Distributed Technology (Distributed Technology), Artificial Intelligence, IoT, Big Data Analytics are some of the technologies that are adopting conventional and traditional finance. The financial and banking industry is no longer exclusively seen in providing comprehensive financial products.

When the concept of e-payment was introduced, it accelerated many traditional transactions. Users no longer have to queue for billing, fees and transfers purposes simply by browsing the web application or payment anytime and anywhere. This innovation alone is enough for the convenience of consumers

 

But this innovation has never stopped. The use of e-payment is still restricted as it is not fast enough. The e-payment process has its own bureaucracy as it is still held by the banking sector. Technology players are still dissatisfied with the e-payment system. They want this technology to be faster and more direct to consumers. 

 

E-wallets (E-wallets) have been introduced by technology players. Now any form of payment is easier. Users need to have their own code and transfer it to another party using just the code. Consumers and merchants only need one scan to transfer money to each other. It functions like a traditional wallet. When consumers go to the store to buy goods, they transfer money from their wallet to the retailer's wallet. What distinguishes ordinary wallets and e-wallets is their shape; wallets are physical while e-wallets are virtual. Examples of well-known e-wallets in Malaysia are GrabPay, Touch n Go, Boost, Vcash and Razerpay. In the world, Samsung Pay, Alipay, Googlepay are popular brands. 

 

The sophistication of this e-wallet technology enables further innovation in the future. It is not possible that one day we will no longer need the handset, but enough with fingerprint or eye retina for money transfer. Blockchain technology using the retina as an identity has already been used by the United Nations (UN) to deliver humanitarian assistance to ensure it is transparent, secure and continues to reach the right people. 

However, to what extent does this e-wallet technology comply with sharia principles? 

Islam in fact has never prevented any form of new technology. Even Islam recognizes and promotes the use of the human intellect to the maximum for the benefit of human life. Islam guides the principle of reason not to contradict human life. No matter what kind of technology is invented, it should be for the benefit of human life and not to challenge the power of God. 

The principles of Shariah in the modern day and the myths and transactions that occur today are halal as long as they have no element of usury, gharar, gambling, illegal things and cruelty. It is not necessarily tied to the old-fashioned covenants. Human evolution and evolution still need to be celebrated in their day. Imam Malik R.A stated that 'Every thing that a human being sells is considered a sale'. 

Does this e-wallet transaction have elements that could lead to its ban? 

Before discussing these elements, it is important for us to put some principles into practice.

First, each e-wallet application is unique and has its own features. Of course, every e-wallet has its own special advantages. Certainly the security level, transfer method, production method and e-wallet limit are different. 

Second, the history and objectives of the existence of this e-wallet are also different. It is undeniable that the origin of application usage is limited, but current developments make it grow and break out of its original meaning. For example, Touch n Go was originally limited to toll payments but it can now be a widespread payment method. Lazada was originally a sell-only platform but they have evolved into e-wallets not just for purchases on their platform. 

Third, the e-wallet is a type of prepaid service provider. To use an e-wallet, we need to fill out or top-up our e-wallet with money before it can be used. It will be issued with the value of making the payment. It is well known that this pre-paid business model is nothing new in Malaysia, but has been around for over 30 years. 

Fourth, e-wallets are not the same as banking deposits. E-wallet still uses banking services for recording and payment purposes. Bank Negara Malaysia (BNM) also differentiates the list of banks and companies allowed for e-money operations (including e-wallets). 

E-wallet providers are not permitted to use e-wallet deposits for any purpose other than transactions made by e-wallet users only. For example, if A deposits RM100 into the e-wallet but does nothing, then the RM100 cannot be used by the e-wallet provider for any purpose. It should remain in the customer's special account. If A transfers RM to RM100, then the e-wallet provider transfers the RM 100 deposit to party B. There may be an e-wallet provider charging the transfer fee as a service fee. 

In general, this e-wallet service does not appear to have elements that are in conflict with shariah principles as long as the goods and services purchased are shariah-compliant such as not buying banned alcohol. The adaptation of Fiqh (Takyif fiqhi) may be a question but it is not yet excluded from the principle of permissible sharia. It can be regarded as a modern covenant accepted by sharia. However, there are some issues raised as a reminder to e-wallet providers. 

First, the promotion of backfill bonuses. Some e-wallet providers offer bonuses for each refill as a promotion using their e-wallet. Charge RM100 and get an additional bonus of RM5. Does that include laptop? In the eyes of the author, it needs to be thoroughly refined. Is the RM100 refinancing a form of customer loan to an e-wallet provider? If it is a loan, then the RM5 bonus is calculated as interest on the loan and is definitely a banned form. However, the author does not see it as a form of loan as the e-wallet provider does not have any use rights to the refill. It is not the same as banks with the right to invest and authorized activities. 

In addition, most e-wallet providers require purchase to use the bonus. This is because, usually, e-wallet providers use the purchase transaction fee to pay the bonus. In other words, the bonus is derived from the profit of the purchase charge, not the customer's money.

Second, e-wallet providers provide special provisions to market their e-wallets to attract more customers. So, the probability of it being a loan deal is a bit far. 

However, if an e-wallet provider uses a client's money for other (other than permitted) activities and provides a bonus to the customer, it is in the form of a loan and is subject to a ban on usury. If this happens, e-wallet providers have already broken the rules as e-wallet providers and can be 'licensed'.

Second, the promotion of conflicting laws. Some e-wallet providers offer a lucky draw to customers using their e-wallet. It simply encourages customers to use e-wallet services. For example, they have to pay RM1 from the e-wallet to participate in a lucky draw. If they win, they will receive a prizes in the form of thousands of ringgit. Those who are unsuccessful will return their money back to their e-wallets. Even RM1's commitment to participate in the lucky draw is a form of gambling that is not allowed even if it is returned if unsuccessful. It's like participating in gambling but not spending your own money. 

In conclusion, e-wallet services do not violate Shariah principles but they do help people to facilitate their day-to-day business. However, there are technical processes and methods of promotion that must be explored by e-wallet providers in order to ensure their services are shariah compliant.

Date of Input: 13/02/2020 | Updated: 13/02/2020 | nurmiera