Wa `alaykum as-Salamu wa Rahmatullahi wa Barakatuh.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:
This is permissible provided both currencies are delivered at the same time of contract, i.e. hand to hand.
The Prophet (peace and blessings be upon him) cleared this requirement in a highly authentic Hadith.
The question is apparently about check cashing not money changing. Some money changers make also check cashing.
Check cashing for a small fee is permissible provided it does not hide interest for the three day clearance that you mentioned.
Accordingly, it seems to me that 1% includes an interest for the three days, looks like too much for simply helping the cashing of a check.
Cashing a check is a matter of sending a person to the nearest branch of the bank and getting the money. It may be for a fee that is equal to the cost of this action plus a small overhead charge, but certainly not 1% of the amount of the check.
If it is done against a fixed reasonable fee, it is not haram and if the amount of charge contains interest for these three days, this part of the fee is a prohibited riba.
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.