
Digital banking, now halal - jbegley
https://restofworld.org/2020/now-serving-halal-apps/
======
lemparin2020
This piece uses snippets of real information to play to a pre-existing agenda
thats pretty easy to spot. So please dont jump to conclusions. For example:

>> "New fintech startups must present themselves before the Indonesian Ulema
Council .. composed of religious clerics"

But later we learn LinkAja "building _the first_ Sharia mobile money product
in Indonesia". So obviously thats not exactly true.

>> embedded in the DNA of the app was Fatwa No. 116 and the fingerprints of
three Sharia clerics.

Well obviously. If you want to build a halal certified banking product it has
to be implement syariah principles, thats the point.

==

For context the banking system here is dominated by conventional banking, with
syariah banking assets tiny in comparison (Rp424 trillion Vs Rp7.4 quadrillion
[0]). There is demand for Syariah products, Indonesia has the largest muslim
population in the world, hence LinkAja and others looking at it as a way to
service this demand. Some people build syariah products for a desire to see
Syariah financing implemented as they believe its better, some as its core to
their beliefs, some for money.

The VP supports syariah banking, of course. But for context in reality Its a
bit of struggle for them (hence the big initiatives), ie not some secret
agenda being forced from above.

As for the merits of syariah VS conventional you'll need to research yourself.
And if you really want to -OMG- talk to an islamic scholar then fire ahead.
You wont exactly get far ignoring one side of the debate. There is also an
interesting discussion on whether "regular" syariah banking products are
normal ones wrapped in a compliant way, as others have touched upon here. And
of course a macro-discussion on the problems with financing & banking ethics
by people of all & no faiths.

[0]
[https://databoks.katadata.co.id/datapublish/2019/09/20/berap...](https://databoks.katadata.co.id/datapublish/2019/09/20/berapa-
aset-perbankan-syariah-dan-
konvensional#:~:text=Pada%202018%2C%20aset%20bank%20syariah,81%25%20pada%202012%2D2018).

~~~
Bishop_
Are you familiar with how muslims in muslim minority countries do banking? Are
there sayariah banks / credit unions that I am simply unaware of due to my
ignorance? Or do they simply not use banks? Or do most just not care about the
rule as I think would be implied by conventional banking being more prevalent
even in a country with as many muslims as Indonesia?

~~~
lemparin2020
Not very familiar, but I do know there are syariah banks in countries with
muslim minorities. Eg Al Rayan Bank in UK.

Just opinion, but I think as with most beliefs people aim to adhear in general
but maybe not to the letter where not practical. Eg. a bitcoin enthusiast who
has a conventional mortgage :)

If given the choice, I think people would favor banking products that fit
their beliefs, but weighed against other factors. One of the limits on growth
of syariah financing here for example is that it sometimes tends to be more
expensive than traditional.

~~~
Bishop_
I kind of assumed it was one of those religious rules that might get thumped
around a lot by those who are very devout but conveniently ignored by most
average folks, like some christians not eating meat on Fridays.

Unfortunate that rules that seemed to have been designed to be fairer to those
borrowing ended up making them more expensive.

------
JCharante
I'm intrigued by how they (almost?) classified digital wallets as haram due to
the cash back benefits which can act as a form of interest payment between
businesses.

Do normal credit cards there not have cash back benefits? Do credit cards
exist or because naturally they would charge you interest, do they not exist?
It's interesting how there's a whole different ecosystem of apps in the part
of the world that most of the world lives in.

Digital wallets must not be something akin to the Discover or Charles Schwab
app on your phone, I recall hearing about them because there was an MLM ponzi
scheme in Vietnam recognized last month where users would receive 80% cashback
on paying bills and you'd receive more depending on how many friends you
onboarded (with the app having a $100 minimum deposit to open an account). I
don't know how that doesn't instantly seem too good to be true, then again I
guess MoviePass seemed too good to be true.

~~~
vladvasiliu
> Do normal credit cards there not have cash back benefits? Do credit cards
> exist or because naturally they would charge you interest, do they not
> exist? It's interesting how there's a whole different ecosystem of apps in
> the part of the world that most of the world lives in.

I'm not familiar with how credit cards work there, but from my point of view
cash-back benefits aren't all that widespread. Aside from AmEx I'm not
familiar with any such arrangement available in France. And even AmEx is
pretty much a joke, you'd have to spend an enormous amount of money every year
just so that cashback could reach the price of the card.

~~~
smnrchrds
That's because credit card interchange fees are much lower in France than they
are in the US. Does the French government cap interchange fees?

[https://www.mastercard.co.uk/content/dam/mccom/en-
gb/interch...](https://www.mastercard.co.uk/content/dam/mccom/en-
gb/interchange/documents/France.pdf)

[https://www.mastercard.us/content/dam/public/mastercardcom/n...](https://www.mastercard.us/content/dam/public/mastercardcom/na/us/en/documents/merchant-
rates-2019-2020-oct-2019.pdf)

~~~
thomasmarcelis
There is a cap set by the EU since 2015

[https://www.adyen.com/blog/all-you-need-to-know-about-the-
eu...](https://www.adyen.com/blog/all-you-need-to-know-about-the-eu-
interchange-cap)

~~~
smnrchrds
Everything makes sense now. 0.3% is an order of magnitude lower than the fees
paid by US merchants.

------
TheUndead96
I am curious about the events that have lead to the development of Sharia
banking. It seems to be partly a shield against runaway interest/inflation.
This has a parallel to the idea of usury in Christianity. Perhaps societies
that avoid becoming too financialised have a better chance of survival?

~~~
vbezhenar
It is forbidden to lend money with interest in Islam. So they invented this
thing which is exactly the same, but formulated with other words and so it's
appropriate.

~~~
LatteLazy
I detest sharia law in general and the whole idea of a religious authority
making rules others then have to follow but... There are subtle and important
differences between Islamic finance and non Islamic finance and there are
upsides to the Islamic approach. One example of this is that there is no
chance of bankruptcy from debts or negative equity. This strongly encourages
responsible lending.

~~~
doesnotexist
Unfortunately mainstream undercurrents of islamaphobia/orientalism have
hijacked the english use of an arabic word "Sharia" and made it into a knee-
jerk scare word.

It seems weird to pronounce that you detest it in general since it's not a
monolithic thing and is more of a general concept encompassing a law tradition
informed by a moral/religious framework.

[https://bridge.georgetown.edu/research/factsheet-
sharia/](https://bridge.georgetown.edu/research/factsheet-sharia/)

[https://ing.org/a-closer-look-at-sharia-in-the-united-
states...](https://ing.org/a-closer-look-at-sharia-in-the-united-states/)

~~~
pc86
Is Sharia law not a religious authority ruling folks who do not belong to that
religion? What exactly is Islamophobic about calling that out?

The exchange between Bill Maher, Sam Harris, and Ben Affleck[0] is a great
example of hamfisting Islamophobia into completely legitimate criticisms of
Islam, Islamism, Sharia over secular society, etc. Not every criticism of
Islam (and truthfully, the _vast majority_ of criticisms of Islam) are not
racist of Islamophobic.

[0]
[https://www.youtube.com/watch?v=vln9D81eO60](https://www.youtube.com/watch?v=vln9D81eO60)

~~~
doesnotexist
There is little to no difference between what the article is describing, a
halal certificate on some financial instruments and the Kosher or Halal stamps
you see on food products at the grocery store. In this case there is a
consumer demand for products labelled Halal and it is being met by a body
deemed to hold legitimacy in determining compliance, how this becomes a
discussion about defending the entirety of a broad concept like Sharia is
perplexing.

~~~
bckygldstn
Scale makes a difference here. Kosher food isn't in large enough demand in the
US to transform the entire agricultural industry, so non-adherents still have
real choice.

A closer example might be the MPAA (US film rating group). It's a voluntary
certification, but it's become a de facto requirement such that the small,
opaque, non-government group shapes the level of violence (high) and nudity
(low) in all TV and films.

~~~
doesnotexist
Surely most people will continue to be able to find a bank that will lend them
money under familiar terms of interest. I find it hard to believe or take
seriously that an Indonesian body certifying financial instruments of debt as
Halal is going to upend JP Morgan and the western banking system en masse.

------
ckl1810
Fascinating. Is Indonesia leading with these fintech refs in Muslim countries.
Anyone aware of this type of oversight in other halal countries?

------
LatteLazy
It's sad that just as all the technology in smart phones is reaching people,
so many places are clamping down and sacrificing all the benefits to keep
control.

------
wrnr
I've always wondered what a Data Protection Officer would do if they where
born in a muslim country.

~~~
teekert
What are your thoughts? What would be different then?

