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Is Paying by Paypal Permissible in Islam?

09 February, 2022
Q I am the treasurer of the Muslim Student's Association at my college. We are looking to expand by accepting on-line donations. I was wondering what method you would suggest for us. I am not sure if Paypal is entirely halal. They charge a transaction fee of 2.5% based on the amount donated to us. Is this a fixed riba? I know credit cards are not considered halal by some scholars, so I am concerned that the money the people would be giving to us would be seen as a "loan" since it is not a cash-transaction and that we would be charged interest for it. If this is the case, do you have any other options or ideas for us that would be halal?

Answer

Dr. Hatem Al-Haj
09 February, 2022

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:

1- It is permissible to pay by credit cards and through Paypal.

2- The percentage taken by Paypal is not usury because they don’t loan you money, but provide you a service.

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In responding to your question, Dr. Hatem Al-Hajj, Dean of the College of Islamic Studies at Mishkah University and a member of the Permanent Fatwa Committee for the Assembly of Muslim Jurists in America (AMJA), states:

Paying by credit cards and paying through Paypal are both permissible. Having a credit card is halal in certain cases, but that is the responsibility of the card holder to verify that.

For the merchant or recipient of donations, you may accept the credit card transactions. The percentage taken by Paypal is not usury because they don’t loan you money, but provide you a service. Those fees are administrative fees.

Almighty Allah knows best.

Source: www.amjaonline.org