a part of Islamic Banking

approved by Shariah Advisory Council Bank Negara Malaysia's Council as a financial instrument that complies with Islamic law (BNM)(Saad, 2014).

must not engage in any activity considered haram in Islam

The prohibition on gharar and riba is the main difference between Islamic and Conventional credit cards (CompareHero.my Team, 2019).

It contains a filtration mechanism to make sure the credit card is only used for halal transactions; it cannot be used to make gambles, buy alcohol, or engage in other non-Islamic activities.

Islamic credit cards provide assurance that financial products are Shariah-compliant and adhere to Shariah principles for Muslims.

offer takaful coverage to the cardholder

convenient Zakat payment

Worldwide - Bay' al-inah, tawarruq, hiwalah, murabahah, ijarah, and kafalah or wakalah.

Malaysia - Bay’al-inah, Tawarruq, and Ujrah

• Bay’ al-Inah is a financing facility involves an agreement by the seller to sale and buyback an asset at a different price (Bank Rakyat, 2022).

• Tawarruq is an agreement wherein products or assets are bought from a financier via a bargain sale or murabahah (cost plus profit) on a deferred payment basis. The cash is then obtained by selling the products or assets to a third party other than the original seller (Bank Rakyat, 2022).

The Arabic word "ujrah" means "fee"

typically used expressly in reference to the costs associated with receiving services. (CompareHero.my Team, 2019)

Islamic banks use the Sharia concept of Ujrah, which is the payment of service fees in return for providing clients with services.

Instead of paying interest, cardholders are charged fees for the privileges, services, and benefits offered by Islamic banks.

In addition, cash advances are also offered, and certain Islamic banks provide both Islamic credit card services and cash advance services.

CIMB Islamic Mastercard and Maybank Ikhwan are two examples of Islamic credit cards that make use of this idea.

Skywards Emirates Islamic Bank (EIB) was the first Islamic bank to introduce a Ujrah card. (Balarabe & Abdullah, 2020)

structured based on Sharia law and does not charge customers additional interest or cost mark-ups

The Ujrah Credit Card does not have variable interest rates like traditional banks; instead, costs are contingent on the balance, with just a fixed service fee assessed to the cardholder or customer. (Uddin et al., 2018)

Credit cards that are based on Ujrah (fee) are acceptable according to Sharia law as long as there is no element of riba (interest).

The majority of Islamic jurists, including the International Islamic Shariah Academy (IIFA-OIC) of the Organisation of Islamic Cooperation, the Shari'ah Advisory Committee (SACBNM) of Bank Negara Malaysia, and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), agree that banks are permitted to charge certain fees, like participation, renewal, or replacement fees, but not riba (interest).

Let's say a bank or credit card company wants to use the Ujrah protocol to process Islamic credit cards. In that instance, the bank needs to guarantee that the costs are set and independent of the total amount owed.

The ‘dha` wa ta`ajjal’ is unacceptable since it resembles the idea of riba.

The pre-agreed discounts are prohibited because they create gharar (Fairooz, 2016).

However the ‘dha’ wa ta’ajjal’ is acceptable since it releases the debtor from debt and waives part of the creditor's rights (Balarabe & Abdullah, 2020).

According to BNM (2010), the Shariah Advisory Council resolved that BNM shall give its customers rebate.

There should be no penalties for late payments because the penalties are similar to riba.

However, the penalty can be paid in cash because it’s supported by the verses from the Quran where Hadith and the fiqh maxim have supported the penalty (Balarabe & Abdullah, 2020).

SAC determined that late settlement fees which incorporate the ideas of gharamah (penalty) and tawi'dah (compensation), are acceptable (BNM, 2010).

The Ujrah contract reveals to us that it can provide many benefits to both parties in a transaction, which can aid in the promotion of social cohesiveness and solidarity.

The Ujrah contract also shows that Islam also has a financial system that is systematic and fair to everyone, which is one way to help reduce poverty and inequality.

The Ujrah contract also shows that this contract is able to help the poor because it gives individuals access to financial assistance without the burden of excessive interest charges.

The concept of interest should be replaced with the concept of Ujrah in daily life because this contract is transparent and the rate is fixed in any transaction.