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I'm intrigued by how they (almost?) classified digital wallets as haram due to the cash back benefits which can act as a form of interest payment between busine

I'm intrigued by how they (almost?) classified digital wallets as haram due to the cash back benefits which can act as a form of interest payment between businesses. Do normal credit cards there not have cash back benefits? Do credit cards exist or because naturally they would charge you interest, do they not exist? It's interesting how there's a whole different ecosystem of apps in the part of the world that most of the world lives in. Digital wallets must not be something akin to the Discover or Charles Schwab app on your phone, I recall hearing about them because there was an MLM ponzi scheme in Vietnam recognized last month where users would receive 80% cashback on paying bills and you'd receive more depending on how many friends you onboarded (with the app having a $100 minimum deposit to open an account). I don't know how that doesn't instantly seem too good to be true, then again I guess MoviePass seemed too good to be true.

vladvasiliu 6y ago
> Do normal credit cards there not have cash back benefits? Do credit cards exist or because naturally they would charge you interest, do they not exist? It's interesting how there's a whole different ecosystem of apps in the part of the world that most of the world lives in. I'm not familiar with how credit cards work there, but from my point of view cash-back benefits aren't all that widespread. Aside from AmEx I'm not familiar with any such arrangement available in France. And even AmEx is pretty much a joke, you'd have to spend an enormous amount of money every year just so that cashback could reach the price of the card.
- smnrchrds 6y ago
  That's because credit card interchange fees are much lower in France than they are in the US. Does the French government cap interchange fees? https://www.mastercard.co.uk/content/dam/mccom/en-gb/interchange/documents/France.pdf https://www.mastercard.co.uk/content/dam/mccom/en-gb/interch... https://www.mastercard.us/content/dam/public/mastercardcom/na/us/en/documents/merchant-rates-2019-2020-oct-2019.pdf https://www.mastercard.us/content/dam/public/mastercardcom/n...
  - thomasmarcelis 6y ago
    There is a cap set by the EU since 2015 https://www.adyen.com/blog/all-you-need-to-know-about-the-eu-interchange-cap https://www.adyen.com/blog/all-you-need-to-know-about-the-eu...
    - smnrchrds 6y ago
      Everything makes sense now. 0.3% is an order of magnitude lower than the fees paid by US merchants.
V6HBGNQHU 6y ago
Credit cards involve interest and thus are haram. Charging interest and paying interest are both haram. > It was narrated that from 'Ata' bin As-Sa'ib, from Ash-Sha'bi who said: The Messenger of Allah [SAW] cursed the one who consumes Riba, the one who pays it, the one who writes it down, and the one who withholds Sadaqah (Zakah). And he used to forbid wailing (in mourning for the dead). Sunan an-Nasa'i 5105 It is still forbidden if that card has a introductory 0% APR or you intend to pay the balance in full because you are signing a contract which can required you to pay riba. https://islamqa.info/en/answers/13725/using-credit-cards-is-haraam-even-if-you-pay-up-within-the-time-limit https://islamqa.info/en/answers/13725/using-credit-cards-is-...
ian0 6y ago
The banking system in Indonesia is predominantly conventional, not syariah. Credit card penetration is low but its more to do with credit risk than religious reasons. They operate as they do elsewhere. The digital wallets are stored value. So kind of like a very limited bank account. Without registering your ID you can put money in there and purchase things online or at point of sales. With extra KYC (Your ID etc) you can store more money in there and transfer it to friends. But the limits are small (<$300) even for the KYCd accounts. The digital wallets themselves though are in general part of large "super" apps, kind of like uber + supermarket delivery + parcel delivery and a whole host of other services. Big players include Gojek & Grab, which started as ride-hailing. The cashback is to attract new users, its pretty rare nowdays though as the wallets tighten their belts. You used to get cashback at point of sale, but it was never a huge amount (typically $2-3). The general idea was to use cashback to encourage daily usage, gradually weaning people off them as they started to become dependant on the other services I mentioned.
adityapurwa 6y ago
Credit card charges interest, and any kind of interest is considered usury/riba and it is forbidden. Loan was supposed to be social activities where the other party should not benefits anything from it. If they want to provide money and gain profits, then they can do the investment contracts, which means now there’s a possibility of loss for the investor. This is halal and considered as a partnership. Digital wallet is recognized as such: 1. User “lend” money to the digital wallet provider when they top up, say $100 2. The money is used for any kind of things as it enters the circulation of the wallet provider, it could be invested, it could be loss 3. When wallet provider provides cashback, say they spent $100 then they obtained back $10 4. The $10 is considered as interest because now the user have $110 on their wallet (the $100 already spent though) - despite they only “lend” the wallet provider $100. Conventional bank and conventional credit cards exist in Indonesia, some provides cash back and other kind of rewards. So yes, it does exist.
- 2Gkashmiri 6y ago
  What a load of baloney analogy and argument. No one "lends" Money when they deposit their cash in the wallets. Wallets are just that, wallets. You simply don't understand cashback. Its not "interest". Its residual fees earned from selling your data to aggregators where in huge quantities it makes sense to quantify the rewards in percentage points. Besides, don't credit card companies charge transaction fees? So if they give you say 10% of your fees back as cashback, is that interest? Does the Arabic word "riba" mean interest or excessive interest? Interest being 1-10% example and excessive one being upwards of 36%? One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down? For someone who has spend some time trying to wrap my head around the Islamic banking concept, all I have come to understand is that this is just a feel good scheme to bring Muslims into the conventional banking fold by any means necessary.
  - Slightofhand 6y ago
    > One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down? The difference is profit/loss guarantee. If as OP said you invest your money, you are bound by risk of either losing your money or making a profit. On the other hand, your money sitting on the bank account earning interest while you are not at risk of losing, but only of profiting is considered haram.
abdullahkhalids 6y ago
I mean, irrespective of the reasons, banning cash back is good. It's a really parasitic part of the modern economic system. You make people play these games to increase their spending, and the end result is the people who don't play these games get punished the most by paying more.

vladvasiliu 6y ago

> Do normal credit cards there not have cash back benefits? Do credit cards exist or because naturally they would charge you interest, do they not exist? It's interesting how there's a whole different ecosystem of apps in the part of the world that most of the world lives in. I'm not familiar with how credit cards work there, but from my point of view cash-back benefits aren't all that widespread. Aside from AmEx I'm not familiar with any such arrangement available in France. And even AmEx is pretty much a joke, you'd have to spend an enormous amount of money every year just so that cashback could reach the price of the card.

smnrchrds 6y ago
That's because credit card interchange fees are much lower in France than they are in the US. Does the French government cap interchange fees? https://www.mastercard.co.uk/content/dam/mccom/en-gb/interchange/documents/France.pdf https://www.mastercard.co.uk/content/dam/mccom/en-gb/interch... https://www.mastercard.us/content/dam/public/mastercardcom/na/us/en/documents/merchant-rates-2019-2020-oct-2019.pdf https://www.mastercard.us/content/dam/public/mastercardcom/n...
- thomasmarcelis 6y ago
  There is a cap set by the EU since 2015 https://www.adyen.com/blog/all-you-need-to-know-about-the-eu-interchange-cap https://www.adyen.com/blog/all-you-need-to-know-about-the-eu...
  - smnrchrds 6y ago
    Everything makes sense now. 0.3% is an order of magnitude lower than the fees paid by US merchants.

V6HBGNQHU 6y ago

Credit cards involve interest and thus are haram. Charging interest and paying interest are both haram. > It was narrated that from 'Ata' bin As-Sa'ib, from Ash-Sha'bi who said: The Messenger of Allah [SAW] cursed the one who consumes Riba, the one who pays it, the one who writes it down, and the one who withholds Sadaqah (Zakah). And he used to forbid wailing (in mourning for the dead). Sunan an-Nasa'i 5105 It is still forbidden if that card has a introductory 0% APR or you intend to pay the balance in full because you are signing a contract which can required you to pay riba. https://islamqa.info/en/answers/13725/using-credit-cards-is-haraam-even-if-you-pay-up-within-the-time-limit https://islamqa.info/en/answers/13725/using-credit-cards-is-...

ian0 6y ago

The banking system in Indonesia is predominantly conventional, not syariah. Credit card penetration is low but its more to do with credit risk than religious reasons. They operate as they do elsewhere. The digital wallets are stored value. So kind of like a very limited bank account. Without registering your ID you can put money in there and purchase things online or at point of sales. With extra KYC (Your ID etc) you can store more money in there and transfer it to friends. But the limits are small (<$300) even for the KYCd accounts. The digital wallets themselves though are in general part of large "super" apps, kind of like uber + supermarket delivery + parcel delivery and a whole host of other services. Big players include Gojek & Grab, which started as ride-hailing. The cashback is to attract new users, its pretty rare nowdays though as the wallets tighten their belts. You used to get cashback at point of sale, but it was never a huge amount (typically $2-3). The general idea was to use cashback to encourage daily usage, gradually weaning people off them as they started to become dependant on the other services I mentioned.

adityapurwa 6y ago

Credit card charges interest, and any kind of interest is considered usury/riba and it is forbidden. Loan was supposed to be social activities where the other party should not benefits anything from it. If they want to provide money and gain profits, then they can do the investment contracts, which means now there’s a possibility of loss for the investor. This is halal and considered as a partnership. Digital wallet is recognized as such: 1. User “lend” money to the digital wallet provider when they top up, say $100 2. The money is used for any kind of things as it enters the circulation of the wallet provider, it could be invested, it could be loss 3. When wallet provider provides cashback, say they spent $100 then they obtained back $10 4. The $10 is considered as interest because now the user have $110 on their wallet (the $100 already spent though) - despite they only “lend” the wallet provider $100. Conventional bank and conventional credit cards exist in Indonesia, some provides cash back and other kind of rewards. So yes, it does exist.

2Gkashmiri 6y ago
What a load of baloney analogy and argument. No one "lends" Money when they deposit their cash in the wallets. Wallets are just that, wallets. You simply don't understand cashback. Its not "interest". Its residual fees earned from selling your data to aggregators where in huge quantities it makes sense to quantify the rewards in percentage points. Besides, don't credit card companies charge transaction fees? So if they give you say 10% of your fees back as cashback, is that interest? Does the Arabic word "riba" mean interest or excessive interest? Interest being 1-10% example and excessive one being upwards of 36%? One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down? For someone who has spend some time trying to wrap my head around the Islamic banking concept, all I have come to understand is that this is just a feel good scheme to bring Muslims into the conventional banking fold by any means necessary.
- Slightofhand 6y ago
  > One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down? The difference is profit/loss guarantee. If as OP said you invest your money, you are bound by risk of either losing your money or making a profit. On the other hand, your money sitting on the bank account earning interest while you are not at risk of losing, but only of profiting is considered haram.

abdullahkhalids 6y ago

I mean, irrespective of the reasons, banning cash back is good. It's a really parasitic part of the modern economic system. You make people play these games to increase their spending, and the end result is the people who don't play these games get punished the most by paying more.