sorry if this question has been asked before. Mufti, I want to buy a few home appliances and the seller is offering the opportunity to pay using Klarna…
so i pay in 3 instalments - interest free https://www.klarna.com/uk/terms-and-conditions/
is this halal ?
May Allah reward you for your time
May Allah bless you.
From the quick look I had, there is interest repayment involved. Thus, it is not permissible.
If I have missed something or you believe there is an interest free option in this offer, then let me know so I can have a read through it inshaAllah.
And Allah knows best!
I understood this to be similar to any installment plan and similar to a murabaha transaction of cost + markup.
There is one invalid condition that interest will be charged if the buyer does not pay. And if the buyer is certain that they’ll make payments, then it should be ok along the same lines of credit card purchase with full payment every month.
p.s. gtg. please excuse the grammer
May Allah reward you for prompt response, my understanding is that the 3 monthly payments are without interest, which is my intention to pay in full before any interest payment is due. but like with everything the small print is what matters.
this my understanding but I wanted to check first. on the face of it ,it looks no interest for 3 months and you can pay even before the three months is up… interest is charged if you don’t pay by three months
Yes if there is a 3 months interest free options then it is fine to enter the agreement. However, many scholars would not agree with this. This is due to the fact that agreeing to pay interest in a contract is not permissible
And Allah knows best!
I understand that this question was asked quite a while ago, however I wanted to clarify that the Klarna Pay in 3 instalments option has no mention of interest or late fees in its terms and conditions at all- these can be viewed here:
Terms and Conditions (klarna.com)
If a buyer fails to make the repayments they are prevented from using the service again and eventually a debt collection agency will be used to collect the debt.
This may therefore be permissible. It must be said that this is different to the Klarna options available to pay over a longer period of time (available for bigger purchases)- these latter contracts do contain late fees in their terms and conditions.
And Allah knows best
Wa alaykum salaam
Klarna is not Shariah compliant to use. Their model is based on Hawalah and charge fees for Hawalah which is not permitted according to majority of scholars.
Assalamu alaykum Mufti
JzkAllahkher for your response. I was not previously aware of Hawalah and so I researched this. From what I understand, Klarna transfers the debt from the original debtor (the customer in this case) to themselves. By charging a fee for doing this, do you mean that they charge a fee to the retailer, and therefore why it is not permissible for us to use? The Klarna website states that retailers pay a transaction fee, in a similar way that retailers pay a fee to credit and debit card providers to process a transaction. Is the Klarna Hawalah model different to debit/credit card models as card providers do not assume responsibility for the debt, and therefore the “transaction fee” claimed by Klarna is in reality a ‘debt transfer fee’?
JzkAllahkher for your help on understanding this better
Wa alaykum salaam,
It’s not clear to me how they compare to credit card or debit cards. If fees are paid to POS systems or intermediaries in the card transactions, that’s different to Klarna profiting from the fees charged to merchants.
JzkAllahkher Mufti, much appreciated. I will avoid them in future insha Allah.
Assalaamu alaykum wa rahmatullahi wa barakatuh Muftis,
Does the same ruling apply to PayPal Pay in 3?
It seems like it is given at no cost to the retailer, and they pay standard transaction fees when a customer chooses to use it
I understand that Klarna makes their money from fees which is haram in a Hawalah transaction, but it seems like PayPal don’t make a profit from Pay in 3, as the transaction fees are seemingly the same without it
More info on PayPal Pay in 3 from a business perspective:
More info on PayPal merchant fees:
Salaam @Mufti_Faraz_Adam can you please elaborate on why hawala is haram?