Answer to a Question on recieving discounts and cashback from digital/mobile wallets
Question: What is the rule on receiving ‘cashback’ from electronic wallets or payment wallets? Many of the electronic wallets give a cashback of 5% and sometimes even more upon using their wallets to make payments such as the electricity bill and so on, is this ‘cashback’ considered from Riba?
In addition to this when these electronic wallets are recharged, we receive more than the amount we recharge for. For eg, if we recharge the payment wallet for 100 Riyals we receive 110 Riyals in our electronic wallet, is this additional amount riba, this is while keeping in consideration the fact that these wallets are not banks.
The electronic wallet is a digital application which organizes payments digitally, and it includes a wallet which stores the users details in an encrypted form on the application or the server of the payment wallet company. The user of these wallets can receive and send money through the wallet and he can also make purchases and pay bills using the payment wallet.
There are certain important points which are related to the recharge of the payment wallet and payments using the payment wallet.
Firstly, upon payment of bills using the payment wallet, the user receives a discount of 5 to 10% on the value of invoice and this discount is known as cashback. And this discount is either from the payment wallet company and sometimes from the seller.
Secondly, when someone recharges a payment wallet account, he sometimes receives an additional amount on his wallet. So for eg, he recharges his account for 100 Riyals but receives 110 Riyals in his wallet.
Upon payment from the wallet the amount is transferred from the account of the sender to the account of the receiver and he can then convert the amount from the wallet to physical notes or transfer the amount to his bank through the payment wallet.
This is the reality of the payment wallets and the Shari rule on payment wallets is as follows
1. The reality of payment wallets is the reality of cheques and sukuk and the money stored in the payment wallets is similar to the money stored in a current account in a bank
2. Upon making payments using the payment wallet, if the payer receives a discount (cashback) from the ‘seller’ it is allowed.
This is because the prices of goods and services is decided by those who are transacting in it. Allah (swt) said
إلا أن تكون تجارة عن تراض منكم
only [in lawful] business by mutual consent.[TMQ Nisa:29]
So if the seller is ready to sell his goods or his services at a price lower than the market price then it is allowed. The principle in sale and trade is that it is ‘halal’ i.e ‘permitted’
Allah (swt) says
وأحل الله البيع
Allah has permitted trade [TMQ BAqarah:275]
3. Upon making payments using the payment wallet, if the payer receives a discount (cashback) from the payment wallet itself , then it is not allowed because this is discount or cashback is Riba. It is similar to the reality of a bank where upon depositing the money the depositor receives interest which is money received on money and this is Riba.
4. As for recharging the account for 100 and receiving 110 , this additional 10 Riyals that is received is considered from riba.
This Is because the 100 Riyals that is deposited in the payment wallet is deposited only for storing which the user would utilize upon his need and it is prohibited to pay an additional amount for storing an amount and it is considered as riba.
Allah knows the best
Dr. Fadhl AbuKhaled AH