The Shariah Advisory Council (SAC) of Bank Negara Malaysia has made a ruling that electronic money (e-money) is now a permissible payment instrument under Shariah, provided that the e-money has to be structured based on appropriate Shariah contract(s) to preserve the rights and obligations of the contracting parties.
This ruling comes into effect following its publication on the bank’s website on Tuesday.
The SAC said that one of the applicable Shariah contracts for e-money is the agency contract (wakalah), whereby the approved issuer acts as an agent to make payment on behalf of the user (wakil bi ad-daf`i) to the merchant. Therefore, the funds received from the user shall be placed in a Shariah compliant trust account or a dedicated deposit account as required pursuant to section 137 of the Islamic Financial Services Act 2013.
An approved issuer is required to comply with the Guideline on Electronic Money issued by the bank. This includes, amongst others, the requirement on utilisation of the funds for investment purpose and any return generated belongs to the approved issuer, subject to the condition set forth in the guideline. In this regard, the funds may be construed as a form of loan (qard) from the user to the approved issuer.
“Since the approved issuer acts merely as an agent to facilitate payment on behalf of the user to the merchant, it is the user’s responsibility to ensure that the e-money is used for Shariah compliant transactions,” SAC said in the ruling.