Halal qist vs card instalments vs buy now, pay later

If you want a phone now and want to pay for it over a few months, you will usually meet three kinds of plan. They can look alike on a poster. Underneath, they work very differently, and the difference decides both what you pay and whether the deal is halal.

Credit card instalments

You buy the phone with a credit card and the bank splits the amount into monthly payments. You need a credit card first, which most people in Pakistan do not have. With a conventional bank this is a loan: the bank pays the shop and you repay the bank, often with a markup, a processing fee and charges if you pay late. Some Islamic banks offer their own versions, so if you use a card, ask your bank exactly how its plan is structured.

Buy now, pay later

A buy-now-pay-later app or shop plan lets you take the phone and pay in parts. The terms vary a lot from one to the next. Some add a fee or a markup for the time, and many add a charge when a payment is late. A charge for being late is the point where a deal turns into riba, so read that part of the terms first.

Halal qist (Musawamah)

In a Musawamah sale the seller buys the phone first and owns it, then sells it to you at one price you both agree before you sign. That price is fixed. It is paid as an advance and then equal monthly instalments, and it never goes up if you are late. It is a sale, not a loan, which is why it can be halal when a loan with interest is not.

This is how Mobilistan works. You choose the phone, a plan of 3, 6 or 9 months and one of three advance amounts, and you see the total before you apply. There is no interest and no late fee. We are open about the other side too: if an instalment is still unpaid on the second day after it was due, the phone may be restricted until you pay, and it is released automatically once you do. It never costs anything extra.

Five questions to ask before you sign

1. 1Who owns the phone before it is sold to me? If nobody owns it, it is a loan.
2. 2What is the one total price, written down, before I agree?
3. 3Does anything get added if I pay late? If yes, that is riba.
4. 4Is there a processing, file or service fee on top of the price?
5. 5Who has certified the plan as Sharia-compliant, and can I see the certificate?

Our answers to all five are on our Sharia page, with the certificate from Al Hijrah Sharia Advisory Services. If you have a question about your own situation, please ask a mufti you trust.