Bank Negara Malaysia’s Shariah Advisory Council Approves Electronic Money as a Shariah-Compliant Payment Instrument

The use of electronic money (e-money) has been approved as a Shariah-compliant payment instrument by the Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM), as announced at a special meeting held by BNM in the last week of January 2020. The SAC made this ruling; subject to the e-money being structured based on suitable Shariah contracts in order to ensure the rights and obligations of the contracting parties involved.

Accordingly, one of the appropriate Shariah contracts for the use of e-money is Wakalah (the agency contract), in which an approved issuer of funds acts as an agent and makes payment on behalf of a user to the merchant. As such, the funds received from the user shall be placed in a Shariah-complia...