Credit cards : contemporary issues from economic and shariah perspective

Abstract AR

Over the past few decades, the Islamic finance industry has witnessed exponential growth, intensified innovation and fast development in its products and services.

This paper discusses the contemporary issues of credit cards from economic and Sharīʿah perspective and explains the implication of an optional interest clause.

Islamic finance providers have experimented with different structures for Islamic credit cards, which, however, have attracted wide-reaching criticism regarding the underlying contracts and whether the concept in itself is in line with the Sharīʿah.

From an analysis of the different market practices of Islamic credit cards, we notice that Islamic banks are struggling to find an appropriate approach to provide an Islamic credit card facility which is profitable and meets their financial intermediary purpose.

We then propose the concept of prepaid Islamic credit cards and the idea of Master Murābaḥah Credit Card Agreement which would be more suitable and generate Sharīʿah-compliant returns.

This paper also tackles the issue of consumerism and mounting indebtedness from the Sharīʿah perspective, and calls for restrictions and control by Islam