Understanding Sharia-Compliant Payment Processing
Islamic finance concepts are built upon the prohibitions of riba (interest) and gharar (uncertainty), thus requiring payment gateways to adopt different transaction cultures in Muslim markets. PayHalal and Islamic Banker are two gateways that provide Murabaha-based solutions whereby the gateway purchases products on behalf of the consumer and sells them at an agreed profit margin. In subscription industries, these providers offer leasing contracts based on the Ijarah model instead of interest-based recurring payments. Even the conventional payment gateway system focused on the Middle East must avoid certain practices-hence late payment charges need to be designated as management fees rather than interest, and all relevant terms must be disclosed upfront prior to purchase. Islamic payment service providers must now be licensed individually by the UAE Central Bank, and authorized gateways such as Network International offer Shari’ah-compliant processing on a dedicated basis.
Implementing Halal Checkout Experiences
Sharia-compliance payment flows can embrace aspects of culture and technology. Payment pages may may carry requirements for certification logos from well-accepted Islamic financial institutions, such as AAOIFI. Countdown clocks and any form of wording approaching gharar are to be avoided. For BNPL products, the contract should allow for profit-sharing structures only (i.e. Mudarabah) in place of fixed interest rates. The payment page must be in both English and Arabic, with a right-to-left presentation for the markets in Saudi Arabia and UAE. The presenting order for payment methods should give preference to local options such as Meeza (Egypt), BenefitPay (Bahrain), and mada (Saudi Arabia) prior to showing international cards. Make use of gateways that hold fatwa approvals, particularly for industries such as halal travel or modest fashion in which religious compliance is paramount. Lastly, settlements will not happen at the same time; some Islamic processors do not settle until the goods are received in order to preclude any claims for riba.
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