E-Bucks

Question: Are E-Bucks permissible?

Answer: (1) E-Bucks are neither cash nor commodities, nor does it have qualities “more similar to commodities than cash”. These instruments are simply a system of recording sales during the process of piling up.

At the point of redeeming or exchanging e-bucks for tangible goods, it is authorization. In other words, by means of e-bucks the bank authorizes the trader to give the bearer goods to a certain value. Simplistically put, it is a letter from the bank authorizing the trader to award the bearer thereof with goods for a specific sum. This is the reality (haqeeqat) of e-bucks, and nothing more.

(2) Those who argue that e-bucks or more precisely, the goods received in lieu of e-bucks, are riba, base their conclusion on the understanding that the account-holder who deposits money in the bank is the bank’s creditor. Thus, e-bucks come within the scope of the Hadith stating the prohibition of the gain yielded by a loan (qardh).

This understanding is the fundamental flaw in their reasoning which leads to the riba conclusion. The basic error is the understanding that the money deposited in a banking account is a loan to the bank. This notion which is stated in almost all our Urdu Fataawa kutub, has been accepted uncritically without subjecting it to proper scrutiny. It has therefore become accepted in our ranks that money deposited into the bank is a loan given to the bank. But this is incorrect.

The cheque-book account holder deposits money in the bank with the express intention that the banks should pay his creditors on demand. The terms of the contract between the bank and the accountholder are for the bank to pay those to whom cheques have been issued. The intention is never to loan the money to the bank.

For what does the accountholder pay such exorbitant fees to the bank? He pays the bank very high charges which are billed under a variety of designations. If the bank is the debtor of the accountholder on the basis of the understanding that the amounts deposited are loans, then what is the purpose of the exorbitant bank charges? Surely, a man who gives someone a loan does not pay the debtor for accepting the loan.

The depositor pays the bank fees (wages) for executing certain tasks on his behalf. The bank is effectively doing a job for the accountholder. The bank is therefore the employee of the depositor., hence it is paid wages for doing the job for which it has been engaged. The claim of the deposited money being a loan to the bank has no validity.

The argument that the bank uses the money of the accountholder for its own benefit does not negate the fact that the bank is the worker of the depositor. The use by the bank of the money is beyond the control of the accountholder. The bank is in the category of a worker who commits khiyaanat. For example, Zaid, the empoyer sends his worker, Bakr with R50,000 to pay his accounts. Bakr, the worker, instead of immediately paying the employer’s creditors, invests the money. He buys a car and sells it for R60,000 making a haraam ‘profit’ of R10,000 for himself. After selling the car, he pays his employer’s creditors. This is precisely what the bank does. Just as Zaid did not advance the money to Bakr as a loan, so too, the depositor does not give the bank a loan when he deposits money into his account. The money is handed to the bank to execute the work for which it has been appointed. That the bank, like, Bakr, commits khiyaanat is another issue.

(3) Since the deposited money is not a loan to the bank, the question of e-bucks being riba simply does not develop.

(4) It is also irrefutable that the award of e-bucks is not linked to money in the account. E-bucks are awarded regardless of there being a bank balance. Even if the credit-card holder does not have a cent in the bank, he is awarded e-bucks when he swipes his card. The more he swipes his card, the more e-bucks he gains.

It should therefore be quite clear that the goods which the cardholder receives in the e-bucks scheme are in lieu of swiping the card. Swiping the card is a valid act since it yields profit for the bank. The greater the creditcard sales, the greater the profit for the bank. Thus, the cardholder is effectively executing a task on behlf of the bank in lieu of a payment (the goods he will receive in th e-bucks system), which is his fee for doing the job.

In the e-bucks system, the cardholder is the employee of the bank. It is an Ijaarah transaction. The goods which the employee (the customer) receives is for doing the card-swiping job.

All other arguments traversed for determining the Shar’i hukm of e-bucks are superfluous and irrelevant.

And Allah knows best.

(Source: Majlisul Ulama South Africa)