36B - Practical Call for Shariah-Compliant Product Innovation

Introduction: Redefining Shariah-Compliant Payments

In the quest for genuine Islamic financial instruments, the market has often seen Shariah-compliant versions of conventional products, sometimes leading to complex structures that may not fully satisfy the most observant consumers. For those Muslims who strictly adhere to Islamic financial principles, the convenience of a modern payment solution is often overshadowed by the necessity of avoiding riba (interest).

In addition to exploring twelve other innovative concepts, we are proposing a unique card concept designed not as a modified 'Islamic Credit Card,' but as a true Islamic Charge Card. This product is akin to the traditional American Express charge card model, where the full balance must be settled monthly, but with robust Shariah compliance elements deeply embedded in every step of the process.

This detailed concept is presented here for review by practical bankers and Shariah scholars alike. We invite a thorough study of this framework, which aims to provide convenience without compromising conviction, thereby filling a significant gap in the global halal economy.

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13. Product Proposal: Al-Baraka Benevolent Charge Card

1. Product Name:

Al-Baraka Benevolent Charge Card (or similar, e.g., "Amanah Charge Card" )

2. Product Concept:

The Al-Baraka Benevolent Charge Card is a Shariah-compliant payment solution designed for individuals seeking a convenient, interest-free alternative to conventional credit cards.

Operating on the principle of a benevolent loan (Qard Hasan), cardholders can make purchases up to a pre-set limit, with the full outstanding balance due on the statement due date. Unlike conventional credit cards, there is no interest charged on any outstanding balance. The card strictly limits purchases to halal products and services from an approved network of merchants.

3. Core Features:

• Qard Hasan (Benevolent Loan) Basis: The facility extended to the cardholder is a benevolent loan, meaning no interest (riba) is charged on the outstanding balance.
  
  
• No Interest/Riba: Absolutely no interest will be levied on purchases or outstanding amounts.
  
  
• Approved Merchant Network: Transactions are restricted to a pre-vetted network of retailers and service providers that adhere to Shariah principles in their product offerings and operations. This ensures all purchases are halal.
  
  
• Halal Product Filtering: The system will be designed to flag and prevent the purchase of non-halal products, even within approved stores, where possible (e.g., through SKU-level integration with merchants).
  
  
• Full Payment Due: The entire outstanding balance must be settled by the due date. This is a charge card, not a revolving credit facility.
  
  
• Grace Period & Automatic Blocking: A grace period of 7 days beyond the due date will be provided. If the payment is not received within this period, the card will be automatically blocked for further usage until the full outstanding balance is cleared. No late fees will be charged as per Shariah principles.
  
  
• High Transaction Limits: Designed for those needing to carry more purchasing power than cash, the limits will be set based on the cardholder's financial standing and ability to repay monthly outstanding usage.
  
  
• Global Reach (Phased Rollout): Initially targeting Muslim-majority countries and then expanding to areas with significant Muslim populations globally.

4. Revenue Model for Islamic Bank:

The bank's revenue generation for the Al-Baraka Benevolent Charge Card will be derived primarily from:

• Merchant Profit Share (Profit-Sharing Arrangement - Musharakah/Mudarabah-like):
  
  
• Instead of a traditional interchange fee, the bank will enter into a profit-sharing agreement with approved retailers.
  
  
• Retailers will share a pre-agreed percentage (e.g., 2-5% or higher) of the profit generated from transactions made using the Al-Baraka card.
  
  
• This is distinct from a commission on turnover, aligning more closely with Islamic finance principles of risk-sharing and profit-sharing.
  
  
• This percentage might be slightly higher than conventional credit card commissions to compensate the bank for the absence of interest income.
  
  
• The bank would provide technology and marketing support to these retailers to drive more business their way. This can be done via the existing card system.
  
  
• Subscription/Annual Fee (Optional, based on value proposition):
  
  
• A modest annual membership fee could be charged to cardholders to cover administrative costs and contribute to the bank's operational expenses. This fee must be clearly disclosed and not linked to the loan amount.
  
  
• Value-Added Services (e.g., Takaful/Islamic Insurance):
  
  
• Offering optional Shariah-compliant Takaful products (e.g., travel Takaful, purchase protection Takaful) to cardholders, generating premium income for the Takaful provider (which could be an affiliate of the bank).
  
  
• Data Analytics & Market Insights:
  
  
• Aggregated and anonymised transaction data could be leveraged to provide valuable market insights to approved merchants, for which the bank could charge a service fee. This helps merchants optimise their halal product offerings.

5. Target Market:

The product is ideal for:

• Shariah-Conscious Consumers: Individuals who strictly adhere to Islamic financial principles and wish to avoid interest-bearing products entirely.
  
  
• Affluent & Middle-Income Muslims: Those who require a convenient payment method for significant purchases (travel, electronics, groceries) but prefer not to carry large sums of cash.
  
  
• Frequent Travellers to Muslim Countries: Individuals who travel for business or leisure to countries where the approved merchant network is robust.
  
  
• Families focused on Halal Lifestyles: Households that prioritise purchasing halal-certified goods and services and appreciate the built-in filtering mechanism.
  
  
• Young Professionals: A growing segment of educated Muslims looking for modern, ethical financial tools.
  
  
• Expatriates in Muslim Countries: Non-local residents seeking Shariah-compliant financial services.

6. Operational Flow & Technology Considerations:

• Merchant Onboarding & Vetting: A rigorous process to vet retailers for their Shariah compliance, ensuring their products and business practices align with Islamic principles. This could involve Shariah advisory board certification. (Can use existing Islamic banks' criteria with modification on "habit spending and past payment habits".
  
  
• Transaction Processing: A robust payment gateway capable of identifying approved merchants and potentially filtering non-halal products at the SKU level (requiring deep integration with merchant POS systems).
  
  
• Mobile Application: A comprehensive mobile app for cardholders to:
  
  
• Monitor spending in real-time.
  
  
• View outstanding balance and due dates.
  
  
• Access a directory of approved halal merchants (with location services).
  
  
• Make payments directly from their bank accounts.
  
  
• Receive Shariah-compliant financial advice.
  
  
• Risk Management: While there are no late fees, managing the risk of default is crucial. This would involve:
  
  
• Thorough credit assessment during application.
  
  
• Clear communication of the 7-day blocking policy.
  
  
• Pre-emptive communication/reminders as the due date approaches.
  
  
• Potential for restricting card limits if a pattern of delayed payments emerges (even if eventually paid).

7. Strategic Advantages & "Out of the Box" Elements:

• True Ethical Differentiation: This card offers genuine Shariah compliance, addressing a significant pain point for observant Muslims who are currently forced to choose between convenience and conviction.
  
  
• Ecosystem Building: The product doesn't just offer a card; it builds an entire "Halal Marketplace" ecosystem by creating a curated network of approved merchants. This fosters loyalty among both cardholders and retailers.
  
  
• Community Empowerment: By channelling spending towards Shariah-compliant businesses, the card can support and grow the halal economy.
  
  
• Educational Tool: The blocking mechanism, without penalty, subtly encourages financial discipline and responsible spending habits, aligning with Islamic ethics.
  
  
• Data-Driven Halal Market Development: The bank gains unique insights into halal consumption patterns, enabling it to advise and invest in the growth of the halal industry.
  
  
• "Halal Lifestyle" Integration: Beyond just payments, the card could integrate with other Shariah-compliant services like Zakat calculation and payment, Waqf contributions, or even curated halal travel packages.
  
  
• Gamification (Shariah-Compliant): Introduce a loyalty program where points earned (without an interest basis) could be converted into donations to approved charities, discounts at halal merchants, or contributions to a benevolent fund. For example, "Hasanat Points" could be earned on purchases.
  
  
• Green/Ethical Halal Emphasis: Partner with merchants who also adhere to ethical sourcing and environmental sustainability, reinforcing the holistic nature of Islamic ethics.
  
  
• Global Halal Merchant Network Alliance: Form alliances with other Islamic banks or financial institutions in different countries to rapidly expand the approved merchant network globally, creating a truly international halal payment system. This would be a game-changer for Muslim travellers.

8. Potential Challenges:

• Merchant Onboarding & Integration: The rigorous vetting and potential for deep POS integration for SKU-level filtering could be complex and time-consuming.
  
  
• Profit-Sharing Model Complexity: Implementing and verifying profit-sharing with a large network of diverse retailers will require robust accounting and auditing mechanisms. (Can also explore the Al-Ujr method)
  
  
• Global Scalability: Expanding the approved merchant network across various regulatory environments and business cultures will be a significant undertaking.
  
  
• Customer Education: Clearly communicating the unique features, particularly the Qard Hasan basis and the 7-day blocking policy, will be crucial.
  
  
• Competitive Landscape: While unique in its full Shariah compliance, it competes with cash and existing credit/debit cards, requiring strong marketing and a value proposition.

By focusing on genuine Shariah compliance, building a supportive ecosystem, and leveraging technology, the Al-Baraka Benevolent Charge Card can fill a significant gap in the market and empower a global community of Shariah-conscious consumers.

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ONLY ALLAH KNOWS BEST
11-Nov-25