Is the PayPal Working Capital Cash Advance Shariah compliant?
The answer
The PayPal Working Capital Cash Advance is not Shariah Compliant.
Fiqh basis
This scheme has an element of Ribā. One receives a loan from PayPal and repays capital plus a fixed fee. The fixed fee is the cost of financing and is part of the counter exchange beyond the capital. Therefore, when one repays PayPal, he repays the capital plus the fixed fee of the same denomination. This is Ribā.
Although this scheme says there is no interest, it is negating simple interest and compound interest[1]. Ribā is more than just simple interest and compound interest; Ribā is an unjustified excess in a bilateral contract which is stipulated for one of the two transacting parties and is without consideration2.
To elaborate, there are two types of Ribā:
1) Ribāan-Nasī`ah is the advantage and excess gained without consideration by deferring delivery of any homogenous counter exchanges. This excess manifests upon default or delay in payment where time is factored as a consideration3.
2) Ribāal-Faḍl is a contractually agreed excess in units without any consideration in an exchange of homogeneous goods.4
Shariah has not considered money to be a commodity but a medium of exchange. When money of the same genus is exchanged, it must be on spot and in equal quantity. Exchanging different amounts at different times brings into effect both forms of ribā: Ribā al-Nasī`ah and Ribā al-Fadhl.
The rationale
Note: The law is not based on wisdoms. The wisdoms are some benefits of the law. It is possible that not all said wisdoms are found at a given time. The absence of any or all wisdoms will not change the ruling or law. The law is not deduced nor determined through wisdoms. Wisdoms are enumerated to complement rationale minds.
Only a person who has a need borrows money. The need can be economic, business related or personal. Thus, lending is an act of charity helping those in need. Shariah has deemed lending as charity and not a form of business. Hence, profiting from lending by means of getting more in return of lending is totally prohibited as need is being commodified and thus, the borrower is exploited and disadvantaged. This conflicts with one of the fundamental principles of Islamic commercial law, namely, equal opportunities (musāwāt).The commodification of need is oppression and wickedness fuelled by greed. Where capitalism thrives on commodification, Shariah on the other hand, prohibits unrivalled and unrestricted commodification.Such behaviour at a macro level creates wealth inequality and disparity. Furthermore, the mass availability of credit with cost promotes debt and debt creation – unhealthy at a micro and macro level.
And Allah knows best.
Mufti Faraz Adam
References
[1] http://www.investopedia.com/articles/investing/020614/learn-simple-and-compound-interest.asp
Simple interest is where the amount of interest earned is fixed over time. For example, if you saved £1000 at 4% simple interest you would earn £40 per year, every year. The amount of interest earned stays the same when dealing with simple interest.
Compound interest is where interest is paid on the amount already earned leading to greater and greater amounts of interest. For example £1000 at 4% compound interest would earn you £40 in the first year but in the second year you would earn 4% on the new amount of £1040 which would be £41.60.
2وَلَيْسَ الْمُرَادُ مُطْلَقَ الْفَضْلِ بِالْإِجْمَاعِ فَإِنَّ فَتْحَ الْأَسْوَاقِ فِي سَائِرِ بِلَادِ الْمُسْلِمِينَ لِلِاسْتِفْضَالِ، وَالِاسْتِرْبَاحِ، وَإِنَّمَا الْمُرَادُ فَضْلٌ مَخْصُوصٌ فَلِذَلِكَ عَرَّفَهُ شَرْعًا بِقَوْلِهِ (فَضْلُ مَالٍ بِلَا عِوَضٍ فِي مُعَاوَضَةِ مَالٍ بِمَالٍ) أَيْ فَضْلُ أَحَدِ الْمُتَجَانِسَيْنِ عَلَى الْآخَرِ بِالْعِيَارِ الشَّرْعِيِّ أَيْ الْكَيْلِ وَالْوَزْنِ، فَفَضْلُ قَفِيزَيْ شَعِيرٍ عَلَى قَفِيزَيْ بُرٍّ لَا يَكُونُ رِبًا، وَكَذَا فَضْلُ عَشَرَةِ أَذْرُعٍ مِنْ ثَوْبٍ هَرَوِيٌّ عَلَى خَمْسَةٍ مِنْهُ، وَقَيَّدَ بِقَوْلِهِ بِلَا عِوَضٍ أَيْ خَالٍ عَنْهُ لِيَخْرُجَ بَيْعُ كُرِّ بُرٍّ وَكُرِّ شَعِيرٍ بِكُرَّيْ بُرٍّ وَكُرَّيْ شَعِيرٍ فَإِنَّ لِلثَّانِي فَضْلًا عَلَى الْأَوَّلِ لَكِنَّهُ غَيْرُ خَالٍ عَنْ الْعِوَضِ لِصَرْفِ الْجِنْسِ إلَى خِلَافِ جِنْسِهِ.
وَقَيَّدَ بِالْمُعَاوَضَةِ لِأَنَّ الْفَضْلَ الْخَالِيَ عَنْ الْعِوَضِ الَّذِي فِي الْهِبَةِ لَيْسَ بِرِبًا، وَتَرَكَ الْمُصَنِّفُ قَيْدًا لَا بُدَّ مِنْهُ، وَهُوَ أَنْ يَكُونَ الْفَضْلُ الْخَالِي مَشْرُوطًا فِي الْعَقْدِ لِأَحَدِ الْمُتَعَاقِدَيْنِ، وَقَدْ قَيَّدَهُ بِهِ فِي الْوِقَايَةِ، وَقَالَ شَارِحُهَا إنَّمَا قَيَّدَ بِهِ لِأَنَّهُ لَوْ شُرِطَ لِغَيْرِهِمَا لَا يَكُونُ رِبًا، وَفِي الْبِنَايَةِ قَالَ عُلَمَاؤُنَا هُوَ بَيْعٌ فِيهِ فَضْلٌ مُسْتَحِقٌّ لِأَحَدِ الْمُتَعَاقِدَيْنِ خَالٍ عَمَّا يُقَابِلُهُ مِنْ عِوَضٍ شُرِطَ فِي هَذَا الْعَقْدِ، وَعَلَى هَذَا سَائِرُ أَنْوَاعِ الْبُيُوعِ الْفَاسِدَةِ مِنْ قَبِيلِ الرِّبَا، (تبيين الحقائق ج 6 ص 135 إمدادية)
(قَوْلُهُ وَتَرَكَ الْمُصَنِّفُ قَيْدًا لَا بُدَّ مِنْهُ إلَخْ) عِبَارَةُ ابْنِ الْكَمَالِ خَالٍ عَنْ عِوَضِ شُرِطَ فِي أَحَدِ الْبَدَلَيْنِ قَالَ فِي شَرْحِهِ فَلَوْ وُجِدَ الْفَضْلُ فِي أَحَدِ الْبَدَلَيْنِ، وَلَمْ يَكُنْ مَشْرُوطًا فِي الْعَقْدِ أَوْ كَانَ مَشْرُوطًا فِيهِ، وَلَمْ يَكُنْ فِي أَحَدِ الْبَدَلَيْنِ بِأَنْ يَكُونَ لِغَيْرِ الْبَائِعِ وَالْمُشْتَرِي لَا يَكُونُ رِبًا، وَإِنَّمَا قَالَ فِي أَحَدِ الْبَدَلَيْنِ، وَلَمْ يَقُلْ لِأَحَدِ الْعَاقِدَيْنِ لِأَنَّ الْعَاقِدَ قَدْ يَكُونُ وَكِيلًا، وَقَدْ يَكُونُ فُضُولِيًّا، وَالْمُعْتَبَرُ كَوْنُ الْفَضْلِ لِلْبَائِعِ أَوْ لِلْمُشْتَرِي اهـ. تَأَمَّلْ. (الشرنبلالية ج 6 ص 135 إمدادية)
3وَهُوَ الزِّيَادَةُ فِي الدَّيْنِ نَظِيرَ الأَْجَل أَوِ الزِّيَادَةِ فِيهِ وَسُمِّيَ هَذَا النَّوْعُ مِنَ الرِّبَا رِبَا النَّسِيئَةِ مِنْ أَنْسَأْتُهُ الدَّيْنَ: أَخَّرْتُهُ – لأَِنَّ الزِّيَادَةَ فِيهِ مُقَابِل الأَْجَل أَيًّا كَانَ سَبَبُ الدَّيْنِ بَيْعًا كَانَ أَوْ قَرْضًا (1) .
وَسُمِّيَ رِبَا الْقُرْآنِ؛ لأَِنَّهُ حُرِّمَ بِالْقُرْآنِ الْكَرِيمِ فِي قَوْل اللَّهِ تَعَالَى: {يَا أَيُّهَا الَّذِينَ آمَنُوا لاَ تَأْكُلُوا الرِّبَا أَضْعَافًا مُضَاعَفَةً. . .} (2) .
ثُمَّ أَكَّدَتِ السُّنَّةُ النَّبَوِيَّةُ تَحْرِيمَهُ فِي خُطْبَةِ الْوَدَاعِ وَفِي أَحَادِيثَ أُخْرَى.
ثُمَّ انْعَقَدَ إِجْمَاعُ الْمُسْلِمِينَ عَلَى تَحْرِيمِهِ.
وَسُمِّيَ رِبَا الْجَاهِلِيَّةِ، لأَِنَّ تَعَامُل أَهْل الْجَاهِلِيَّةِ بِالرِّبَا لَمْ يَكُنْ إِلاَّ بِهِ كَمَا قَال الْجَصَّاصُ.
وَالرِّبَا الَّذِي كَانَتِ الْعَرَبُ تَعْرِفُهُ وَتَفْعَلُهُ إِنَّمَا كَانَ قَرْضَ الدَّرَاهِمِ وَالدَّنَانِيرِ إِلَى أَجَلٍ بِزِيَادَةٍ عَلَى مِقْدَارِ مَا اسْتَقْرَضَ عَلَى مَا يَتَرَاضَوْنَ بِهِ (3) .
وَسُمِّيَ أَيْضًا الرِّبَا الْجَلِيَّ، قَال ابْنُ الْقَيِّمِ: الْجَلِيُّ: رِبَا النَّسِيئَةِ، وَهُوَ الَّذِي كَانُوا يَفْعَلُونَهُ فِي الْجَاهِلِيَّةِ، مِثْل أَنْ يُؤَخِّرَ دَيْنَهُ وَيَزِيدَهُ فِي الْمَال، وَكُلَّمَا أَخَّرَهُ زَادَهُ فِي الْمَال حَتَّى تَصِيرَ الْمِائَةُ عِنْدَهُ آلاَفًا مُؤَلَّفَةً (4) . (الموسوعة الفقهية الكويتية ج 2 ص 57-58)
4وَرِبَا الْفَضْل يَكُونُ بِالتَّفَاضُل فِي الْجِنْسِ الْوَاحِدِ مِنْ أَمْوَال الرِّبَا إِذَا بِيعَ بَعْضُهُ بِبَعْضٍ، كَبَيْعِ دِرْهَمٍ بِدِرْهَمَيْنِ نَقْدًا، أَوْ بَيْعِ صَاعِ قَمْحٍ بِصَاعَيْنِ مِنَ الْقَمْحِ، وَنَحْوِ ذَلِكَ.
وَيُسَمَّى رِبَا الْفَضْل لِفَضْل أَحَدِ الْعِوَضَيْنِ عَلَى الآْخَرِ، وَإِطْلاَقُ التَّفَاضُل عَلَى الْفَضْل مِنْ بَابِ الْمَجَازِ، فَإِنَّ الْفَضْل فِي أَحَدِ الْجَانِبَيْنِ دُونَ الآْخَرِ.
وَيُسَمَّى رِبَا النَّقْدِ فِي مُقَابَلَةِ رِبَا النَّسِيئَةِ:
وَيُسَمَّى الرِّبَا الْخَفِيَّ، قَال ابْنُ الْقَيِّمِ: الرِّبَا نَوْعَانِ: جَلِيٌّ وَخَفِيٌّ، فَالْجَلِيُّ حُرِّمَ، لِمَا فِيهِ مِنَ الضَّرَرِ الْعَظِيمِ، وَالْخَفِيُّ حُرِّمَ، لأَِنَّهُ ذَرِيعَةٌ إِلَى الْجَلِيِّ، فَتَحْرِيمُ الأَْوَّل قَصْدًا، وَتَحْرِيمُ الثَّانِي لأَِنَّهُ وَسِيلَةٌ، فَأَمَّا الْجَلِيُّ فَرِبَا النَّسِيئَةِ وَهُوَ الَّذِي كَانُوا يَفْعَلُونَهُ فِي الْجَاهِلِيَّةِ. (الموسوعة الفقهية الكويتية ج 2 ص 58)
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.