BUY FIRST, PAY LATER (BNPL): THE MALAYSIAN ISLAMIC LAW PERSPECTIVE

The recent technological advancement allows various types of contracts to deviate from the normal, traditional way of contracting. Many financial institutions and e-commerce platforms have started introducing many products with the concept of Buy First Pay Later (hereinafter referred to as “BFPL”) in order to increase the consumer’s purchasing power. Somehow, the question arises as to whether the concept of BFPL is permissible under the context of Islamic Law. Islam has a few rules of contracting which include the prohibition of Riba, Gharar (uncertainty) and Maysir (gambling), the requirement to pay zakat for the individual or the company’s gain and many more. Preliminary findings suggest potential conflicts related to Riba and Gharar, requiring further scrutiny of BNPL contracts under Islamic finance principles. Hence, this paper aims to explore whether the BNPL concept aligns with the principles of Islamic Law, particularly in the context of the Malaysian financial regulations. This research employs a qualitative approach through a comprehensive literature review of Islamic texts, contemporary fatwas and Malaysian legal rulings alongside the descriptive analysis of the Shariah principles governing the commercial transactions. This paper focuses on the Malaysian context somehow it provides insights that may be relevant to other jurisdictions practising Islamic finance. This research can also be used as a guideline for future products that might resemble the BNPL mechanism. The research outcome is expected to provide an overview to the policymakers and financial institutions in ensuring that the BNPL product design comply with the Islamic principles while maintaining the consumer protection aspects and legal compliance.