Is it permissible to use the ‘No Cost’ EMI payment method on Amazon or Flipkart?
Question:
Assalamualaikum, I am from India, here when we are making a purchase online through amazon/ flipkart through a credit card , they are making it a no cost EMI ( EASY MONTHLY INSTALLMENTS ) by giving upfront discount equal to the EMI interest cost charged by the bank , effectively making it a no cost EMI , is this allowed. Can I go forward and make a purchase as it is a no cost EMI .
For reference u can check flipkart.com/amazon.in for terms and conditions for nocost EMI on banks.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-Salāmu ‘Alaykum Wa-Rahmatullāhi Wa-Barakātuh.
In Islam, we have been instructed to avoid any transaction involved with interest[1] in the following verse:
يأيها الذين آمنوا اتقوا الله وذروا ما بقي من الربا إن كنتم مؤمنين (البقرة : ٢٧٨)
O you who believe, fear Allah and give up what still remains of ribā, if you are believers.
Now, in light of this verse, let us examine the process that takes place in the EMI and the ‘No Cost’ EMI payment methods. EMI (equated monthly installments) is a payment method provided by some online stores such as Amazon and Flipkart which allows the customer in certain regions to pay for what he wishes to purchase in a few installments, and this feature is only provided to customers paying with a card issued by certain banks. Once the order is placed, the store charges the customer’s bank with the full price of the item which is then deducted from his credit limit. Thereafter, the payments that are made in order to settle the credit are done directly with the bank, and since the balance isn’t zeroed out by the end of the month, an interest fee is charged on a monthly basis along with the installments.
These stores also provide customers with a ‘No Cost’ EMI option which is very similar in that there are monthly installments made to the bank with interest, but the difference here is that the seller agrees to give an upfront discount to the customer equal to the amount that will be charged by the bank in interest. Hence, the total amount the customer pays is equal to the price of the item being purchased. All of this is clearly stated in the Terms and Conditions[2] as can be read below:
“Using the No Cost EMI payment option, the customers who undertake the purchase transactions on Amazon.in, will only pay amounts such that the total of these amounts during the EMI tenure is equal to the list price of the products as displayed on Amazon.in (at the time of making the purchase transactions). The participating sellers or brands (as the case may be) will provide amounts equivalent to the interest imposed by the banks to undertake the purchase transactions on EMI.”
So, when using any of these payment methods, there are three parties in each transaction:
1. The customer
2. The seller
3. The bank
The transaction between the customer and seller is valid as there are no impermissible conditions or aspects involved without taking into account the permissibility of the item being purchased, but due to the presence of the bank by charging interest which is impermissible in Islam, purchasing items with the selection of the ‘No Cost’ EMI option will not be permissible.
And Allah Ta’ala Knows Best.
Sibghatallah Ahmed
Student of Darul Iftaa
Baltimore, Maryland, USA
Checked and Approved by,
Mufti Muhammad Zakariyya Desai.
[1] فتح القدير (15 / 290)
(باب الربا) هو من البيوع المنهية قطعا بقوله تعالى: {يا أيها الذين آمنوا لا تأكلوا الربا} … أي الزائد في القرض والسلف على المدفوع والزائد في بيع الأموال الربوية عند بيع بعضها بجنسه.
البحر الرائق (6 / 124)
وفي البناية قال علماؤنا هو بيع فيه فضل مستحق لأحد المتعاقدين خال عما يقابله من عوض شرط في هذا العقد وعلى بهذا سائر أنواع البيوع الفاسدة من قبيل الربا.
فقه البيوع (1 / 439)
…وإن العملية في هذه البطاقة عملية ربوية بحتة لا تجوز.
فتاوى محموديه (16 / 272)
جو زیادتی بلا معاوضہ حاصل ہو وہ سود ہے جیسے ایک من گندم دے کر ایک من ایک سیر گندم لینا، دس تولہ چاندی دے کر گیارہ تولہ چاندی لینا، پانچ تولہ سونا چاندی دے کر ساڑھے پانچ تولہ سونا لینا، سو روپے دے کر ایک سو پانچ روپيه لینا وغیرہ وغیرہ۔ فقط والله سبحانہ تعالی أعلم.
كفايت المفتي (8 / 69)
سود کا لین دین مسلم اور غير مسلم غیر محارب سے کرنا مسلمان کے لئےجائز نہیں.
[2] https://www.amazon.in/gp/help/customer/display.html?nodeId=202054440