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The Rise of Shariah-Compliant Buy Now Pay Later (BNPL) Platforms

Buy now pay later (BNPL) platforms have become increasingly popular in recent years, allowing consumers to purchase items and pay for them at a later date. However, for Muslims who follow Shariah principles, traditional BNPL platforms may not be an option due to the prohibition of interest (riba) and the need for transparency and fairness in financial transactions.

Fortunately, a number of Shariah-compliant BNPL platforms have emerged to meet the needs of this market. These platforms operate in a way that is consistent with Islamic law, ensuring that they are compliant with the principles of fairness and justice.

One key principle of Shariah-compliant BNPL platforms is the avoidance of riba, which is defined as any excess or surplus charged on a loan. This is prohibited in Islam as it is seen as a form of exploitation and injustice. In contrast, Shariah-compliant BNPL platforms typically use profit and loss sharing (PLS) structures, in which the provider and the user share the profits or losses of the transaction.

Another principle of Shariah-compliant BNPL platforms is transparency and fairness. This is in line with the Quranic verse, “O you who have believed, be persistently standing firm in justice, witnesses for Allah, even if it be against yourselves or parents and relatives” (4:135). By ensuring that all terms and conditions are clearly stated and fair, Shariah-compliant BNPL platforms can help to build trust and confidence among users.

In addition to these principles, Shariah-compliant BNPL platforms may also follow other guidelines based on the teachings of the Quran and hadith (sayings and actions of the Prophet Muhammad). For example, the hadith states, “Do not sell what is not with you” (Bukhari and Muslim), which prohibits the sale of items that the seller does not physically possess. This principle is often applied to BNPL transactions, with the provider only releasing funds to the seller once the item has been received by the buyer.

Overall, Shariah-compliant BNPL platforms offer a viable alternative for Muslims who want to participate in the BNPL market while still adhering to their religious principles. By following the principles of fairness, transparency, and justice, these platforms can help to foster trust and confidence among users.

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