Salam Mufti sahab,
Jazakallah khair for guiding us with your insights. I have a question regarding the compliance of Visa or Master card stock on a qualitative basis. Though they can be classified broadly as part of financial services sector, here is how they make their money.
'Visa makes its profits by selling services as a middleman between financial institutions and merchants. The company does not profit from the interest charged on Visa-branded card payments, which instead goes to the card-issuing financial institution"
Taken from https://www.investopedia.com/how-visa-makes-money-4799098
Another source is as follows…
https://www.fool.com/investing/2017/04/25/how-visa-inc-makes-money.aspx
Whats your take on that?
Wa alaykum salaam,
Visa and Mastercard are payment gateways and not in and of themselves interest-based companies.
Their business activity is the transfer of payments AFTER payments are done. Hence, they are not part of any impermissible transaction.
Allah knows best
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Jazakallah khair for the reply 
On the same note, Square and Paypal would be compliant as well, correct?
In terms of the business activity, PayPal also offer financing so that might make it different to Visa and Mastercard.
You will need to see the Shariah compliance reports on these companies for further clarity.
Allah knows best
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Thanks. Any idea where I can access these reports?
Thanks, Mufti Faraz. Are Square’s business activities compliant?
Seems OK to me but an expert advice from you can definitely help
Square initially appears OK as it is similar to Visa and Mastercard in that it charges the transfer of payments AFTER payments are done.
However, Square also has a lending scheme for small businesses which may be problematic. Although I believe it is a small contributor to revenue, it could be complicated to calculate. Square’s loans are slightly unconventional though and I wonder whether it makes it more compliant
If I was a small business owner wanting to borrow £100k, Square will lend it at a fixed price and I will pay them back through transactions. So in addition to the flat 1.75% fee at the terminal, Square will charge an extra 15% for example, until the loan is paid off. Does the fixed fee make this type of loan permissible?
More details here: Square Capital
I have read regarding Square Capital’s lending product and understand that they charge a fixed fee based on a factor rate.
Whilst there is scope to charge an administration fee for loans, this admin fee must accurately reflect the actual costs and expenses incurred in facilitating the loan. This is permitted and approved by most scholars around the world. It is also part of the AAOIFI Sharia Standard on Loans. If the fee is not for any actual services but simply a commercialisation of lending and a fee as revenue, this will be Riba and will be not permitted.
My approach in such circumstances is that this should be a flat fee and not a percentage-based fee as the services required are generally the same so a percentage fee is unwarranted. If a greater amount of service is required for larger sums, a separate higher fee can be charged for this.
Of course, there needs to be a clear understanding on what the fee is for. This conversation needs to take place with Square Capital before giving any conclusive answer.
Regards
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A.O.A. Sir
Kindly I need to ask the question, about MOT details some companies provide MOT details free of cost and some paid, is the paid one is good in terms of business.
Such as Check MOT History
Jazak Allah
Here is report by Islamicly.com on payment processing companies. You can find an up-to-date list of Shariah Compliant stocks on Islamicly App.
http://blog.islamicly.com/payment-processor-mastercard-visa-american-express-shariah-compliant/
As a webshop owner, am I allowed to charge my customers through payment gateways such as Visa and Mastercard?
Wa alaykum salaam,
Yes, as a retailer, it is permissible to use these methods to collect payment.