Skip to content
Islamic Credit Cards
Countries:United Arab Emirates101Malaysia88Saudi Arabia111Pakistan8Indonesia10Qatar38All countries

Contract structure

Murabahah

The bank buys the thing you want, then sells it to you at a stated cost plus a stated profit, payable later.

مرابحةCost-plus sale133 cards use it

How it works

Murabahah is a sale where the seller discloses what the goods cost him and what profit he is adding. There is no loan. The bank owns the goods first, takes the risk of owning them, and then sells them on to you at a price you both agree, which you pay over time. Applied to cards, it usually shows up in one of two ways: an instalment plan where a particular purchase is converted into a murabahah sale of that item, or as the sale leg inside a tawarruq. Because the price is fixed at the moment of sale, it cannot legitimately rise afterwards. That is the feature that matters most to you: your debt does not grow while you owe it.

What it looks like in numbers

Illustrative figures, not a real product. You want a washing machine priced at RM 3,000. The bank buys it for RM 3,000 and sells it to you for RM 3,360 payable in 12 monthly instalments of RM 280. Total RM 3,360, fixed. If you are two months late, the price is still RM 3,360; the bank may claim its actual recovery costs and, in some jurisdictions, a late charge that goes to charity, but the sale price itself does not move. Compare that with a conventional instalment plan where the balance keeps compounding.

The argument

Scholars do not all agree about this structure. Both positions are set out here because you are entitled to see the disagreement rather than one side of it.

Why it is accepted

Sale is expressly permitted in the Qur'an, and murabahah is a sale with disclosed cost and profit. AAOIFI devotes Shariah Standard No. 8 to it. The key conditions are ownership and risk: the bank must genuinely own the goods before selling them, which is what separates a sale from a financing fee. AAOIFI's tawarruq standard cross-refers to Standard No. 8 for exactly this reason (clause 4/1: 'There shall also be a real commodity that the seller owns before selling it').

Why it is challenged

The objection is not to murabahah itself but to hollow versions of it: the bank never really takes ownership or risk, the 'goods' are a formality, the profit rate is set by reference to a conventional interest benchmark, and the customer's binding promise to buy makes the whole thing a loan in substance. AAOIFI's controls, requiring a real commodity, real identification, and real possession, exist because those shortcuts were being taken. On the card specifically, murabahah does not solve the revolving-credit problem: the moment the bank charges you more for paying later, you are outside murabahah and inside the thing AAOIFI Standard No. 2 clause 3/3 prohibits.

Where AAOIFI stands

Covered by AAOIFI Shariah Standard No. 8 (Murabahah). AAOIFI Shariah Standard No. 2 clause 3/3 separately prohibits issuing a credit card that provides an interest-bearing revolving facility, so a murabahah label does not rescue a card whose cost rises with time outstanding.

The rulings that govern it

  • AAOIFI · Shariah Standard No. (8), Murabahah

    Sets the conditions for a cost-plus sale, including genuine ownership and risk-bearing by the seller before the sale to the customer.

    Read the source

  • AAOIFI · Shariah Standard No. (3), Procrastinating Debtor, clause 2/1/7

    In a murabahah sale, if the asset sold is still in the condition in which it was sold and the buyer defaults and becomes bankrupt, the selling institution may repossess the asset instead of pursuing bankruptcy.

    Read the source

What to watch for

  • Check that the total price is fixed and printed. A murabahah price that can be revised is not a murabahah price.
  • Check whether an instalment plan on your card is a genuine murabahah on the item you bought, or a re-pricing of a cash balance. They are not the same thing.
  • Early settlement usually depends on a rebate (ibra'). Ask whether the rebate is guaranteed by the contract.
  • A profit rate quoted 'per annum' on a murabahah is a way of describing a fixed mark-up, not a rate that will accrue. If it accrues, question it.

Cards built on Murabahah

133 cards across 6 markets.

United Arab Emirates67Bangladesh3Malaysia13Pakistan1Qatar23Saudi Arabia26

aafaq Islamic Finance

Aafaq Platinum Credit Card

AED 250 welcome bonus, 2% AIF Rewards on international spend, free for life

Annual fee
No annual fee
Profit rate
3.99% /mo
Minimum income
AED 8,000 a month
Structure
Murabahah
Mixed rewards

Full breakdown

aafaq Islamic Finance

Aafaq Titanium Credit Card

No rewards programme — the Titanium card is positioned on 0% balance transfer and instalment plans

Annual fee
AED 200
Profit rate
3.99% /mo
Minimum income
AED 5,000 a month
Structure
Murabahah

Full breakdown

aafaq Islamic Finance

Aafaq World Elite Credit Card

5% AIF Rewards on online and dining, 3% on international spend, plus a 20% cashback welcome offer

Annual fee
AED 1,000
Profit rate
3.99% /mo
Minimum income
AED 20,000 a month
Structure
Murabahah
Mixed rewards

Full breakdown

ADCB Islamic Banking

ADCB Emirati Islamic Card

7% cashback across seven categories, up to AED 1,500 a month, for UAE nationals only

Annual fee
AED 945
Profit rate
3.69% /mo
Minimum income
AED 8,000 a month
Structure
Murabahah
Cashback

Full breakdown

ADCB Islamic Banking

Islamic 365 Cashback Card

6% cashback on dining, 5% on fuel and Salik, 3% on groceries; up to AED 1,000 a month

Annual fee
AED 383.25
Profit rate
3.69% /mo
Minimum income
AED 5,000 a month
Structure
Murabahah
Cashback

Full breakdown

ADCB Islamic Banking

Shukran ADCB Islamic Card

10% back as Shukrans at Landmark Group brands, up to AED 1,200 welcome bonus

Annual fee
AED 262.50
Profit rate
3.69% /mo
Minimum income
AED 5,000 a month
Structure
Murabahah
Reward points

Full breakdown

See all 133 cards using Murabahah

Sources

  • AAOIFI, Shariah Standards, 2015 English edition, Shariah Standard No. (8) Murabahah; Shariah Standard No. (2) clause 3/3; Shariah Standard No. (3) clause 2/1/7; Shariah Standard No. (30) clause 4/1.

This explains the mechanism, not the ruling

Understanding how a contract works is not the same as knowing whether it is acceptable to you. On that, ask a scholar you trust. The wider debate is here.

The other contracts

UjrahThe bank charges you a fixed fee for the service of giving you a card, rather than a charge that grows with the money you owe.TawarruqThe bank sells you a commodity on credit at a marked-up price, you sell that commodity to somebody else for cash, and the cash becomes your spending limit.Bai' al-InahThe bank sells you an asset on credit at a high price and immediately buys the same asset back from you for a lower cash price, so you walk away with cash and a bigger debt.SalamYou sell the bank a quantity of goods to be delivered in future, the bank pays you the whole price today, and that advance payment is what you spend on the card.Qard HasanThe bank lends you the money and you pay back exactly what you borrowed, not a penny more.KafalahThe bank stands behind you and promises the shop it will pay, then collects from you.IjarahYou are renting the use of the card and the payment system, and the rent is the fee.WakalahThe bank acts as your agent, paying the shops on your behalf, and charges you an agency fee.Ta'widh and GharamahTwo different late-payment charges: one is meant to reimburse the bank's real costs and it keeps that money, the other is a fine and in some countries the bank must give it away.