Shariah-Compliant E-Wallet Prospects & Challenges (28 October 2020 ISRA Consulting)

Shariah-compliant E-Wallet:
Prospects & Challenges
OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE ISSUES & CHALLENGES Q&A
AGENDA:
• Part 1: E-Wallet: An Overview
• Part 2: E-Wallet from Legal & Regulatory
Perspectives
• Part 3: E-Wallet from Shariah Perspectives
• Part 4: Panel Discussion: E-Money - Issues &
Challenges Faced by the Operator
DR. MARJAN MUHAMMAD
She is the Head of the Research Quality Office and Senior Researcher at the International
Shariah Research Academy for Islamic Finance (ISRA). In her current capacity, she
oversees the quality of research output for projects undertaken by ISRA. She also
coordinates ISRA’s internal audit exercise. She was the Director of Research at ISRA from
2013-2017.
She is currently a member of Shariah Advisory Council of Bank Negara Malaysia (BNM)
effective from 1 November 2019. Previously, she was a member of Shariah Committee of
Maybank Islamic Berhad, SME Bank Berhad, MBSB Berhad and RHB Islamic Berhad.
Dr. Marjan has published many articles in international and local refereed journals,
produced several research papers on Islamic finance, written several book chapters,
contributed to industry reports, and presented papers in various local and international
conferences. She is the Editor of ISRA’s main textbooks. Dr. Marjan is the project manager
for both market reports on ‘The Role of Sukuk in Islamic Capital Market’ and ‘Islamic Fund
Management’ funded by the Standing Committee for Economic and Commercial
Cooperation of the Organization of Islamic Cooperation (COMCEC).
3
AN OVERVIEW
Part 1: E-Wallet
AN OVERVIEW
OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Payment System in Malaysia
TYPES OF PAYMENT
SYSTEM IN
MALAYSIA
LARGE VALUE RETAIL PAYMENT

PAYMENT SYSTEM SYSTEM
eSPICK, Shared ATM Network, eDebit,

RENTAS SYSTEMS
IBG, FPX, Direct Debit
Cheques, Credit Card, Charge Card, Debit

INSTRUMENTS
Card, E-Money
ATM, Internet Banking, Mobile Banking

Source: CHANNELS
https://www.bnm.gov.my/index.php?ch=ps&pg=ps_mps_type& and Payments
ac=177&lang=en 5

Payment Instrument in Malaysia
Designated Payment Instruments:
Debit card Credit card Charge Card E-Money
 E-money: a payment instrument, whether tangible or intangible that:

i. stores funds electronically in exchange of funds paid to the issuer; and
ii. is able to be used as a means of making payment to any person other than
the issuer [open-loop]
Source: BNM, Guideline on E-Money, Clause 5.1.1, p. 2
6

E-Money Transaction Volume Per Capita (2015-2019)
7
Source: BNM Basic Payment Indicator

Number of E-Money Issuers in Malaysia (2016 vs 2020)
2016 2020 (Sep)

Bank Bank
3 6
Non-Bank Non-Bank
25 48
Total Total
Almost double
28 increase
52
Source: BNM https://www.bnm.gov.my/index.php?ch=ps&pg=ps_nonbank_emoney 8

Example of E-Money Issuers in Malaysia (Sep 2020)
Non-Bank = 48
Bank = 6
Sources: BNM https://www.bnm.gov.my/index.php?ch=ps&pg=ps_nonbank_emoney; 9

https://www.comparehero.my/e-wallet/articles/best-ewallet-malaysia
E-Wallet vs E-Money
E-Wallet E-Money
 Digital equivalent of our physical wallet  Like our money (coins & notes)
 Appears as an app on your smartphone  Appears as a digital value in e-wallet or
card (pre-paid/debit card)
* Large e-money scheme: >RM200

* Small e-money scheme: <RM200
10

Type of E-Wallet
E-Money Issuer (Licensed) Non E-Money Issuer
Network-Base Card-Base Open-Loop Close-Loop

vs vs
Stores e-money on Rides on card
cloud network Does it store
Non-Bank Bank Stores credit, debit & e-Money? Can be topped up
prepaid cards
Examples
Examples
Is it open- Is it open-
loop? Pass-through loop? Can’t use with other
merchants
Is it linked to Is it linked to
card network? card network?
(Visa, (Visa,
Mastercard) Mastercard) 11

How to Fund E-Wallet
Top up e-
wallet via:
Source: https://www.ecinsider.my/2019/05/ewallet-malaysia-infographic.html 12

E-Wallet Usage in Malaysia
Source: Oppotus Q32019 - https://www.oppotus.com/e-wallets-malaysia-landscape-end-2019/ 13

DR. TUAN BADRUL HISYAM BIN TUAN SOH
He is currently a Consultant at ISRA Consulting, He also serves as a Shariah Committee

Member of Alliance Islamic Bank and MyEG Islamic Finance Sdn. Bhd. As a consultant and
Shariah advisor, he provides extensive Shariah consultancy and advisory services as well
as performing Shariah review and audit to various international and local financial
institutions. Prior to this, he had served numbers of Islamic financial institutions including
the Securities Commission of Malaysia as a Shariah officer where Islamic capital market
(particularly Sukuk) and wholesale banking (corporate) have become his forte.
He holds PhD in Law from Newcastle Law School, United Kingdom where he conducted a
doctoral research pertaining to Musharakah (Profit and Loss Partnership) and its
compatibility with the Malaysian legal and regulatory framework. He obtained LL.M (Master
of Law) in Islamic Banking and Finance from the International Islamic University Malaysia
(IIUM) and Bachelor of Judicial Studies and Laws (majoring in Shariah) from Umm al-Qura
University, Makkah al-Mukarramah.
He is also a fellow of Certified Shariah Adviser and Auditor (CSAA) of AAOIFI, a registered
Shariah Adviser of the Securities Commission Malaysia, and a Shariah legal counsel for the
Shariah High Courts of the Federal Territories of Malaysia.
14
LEGAL & REGULATORY
PART 2:
E-Money / E-Wallet
From LEGAL & REGULATORY
PERSPECTIVE
15

Payment System in Malaysia
TYPES OF PAYMENT
SYSTEM IN
MALAYSIA
LARGE VALUE
RETAIL PAYMENT
PAYMENT SYSTEM
SYSTEM
(SIPS)
eSPICK, Shared ATM Network, eDebit,

RENTAS SYSTEMS
IBG, FPX, Direct Debit
Cheques, Credit Card, Charge Card, Debit

INSTRUMENTS
Card, E-Money
ATM, Internet Banking, Mobile Banking

Source: CHANNELS
https://www.bnm.gov.my/index.php?ch=ps&pg=ps_mps_type& and Payments
ac=177&lang=en 16

IFSA
Submission Requirements for Application for Approval to Operate a

Payment System or to Issue a Designated Payment Instrument or to be
Registered to Provide Merchant Acquiring Services:
“Any person who intends to operate a payment system or issue a

designated payment instrument is required to obtain prior approval of
Bank Negara Malaysia (BNM) pursuant to section 11 of the Financial
Services Act 2013 (FSA 2013) or section 11 of the Islamic Financial Services
Act 2013 (IFSA 2013), as the case may be”
17
IFSA
Division 1 of Part 1 of Schedule 1 of FSA Part 1 of Schedule 1 of IFSA
(a) enables the transfer of funds from one (a) enables the transfer of funds from one
banking account to another, which Islamic banking account to another, which
includes any debit transfer, credit transfer includes any debit transfer, credit transfer
or standing instructions, but does not or standing instructions, but does not
include the operation of a remittance include the operation of a remittance
system approved under section 40 of the system approved under section 40 of the
Money Services Business Act 2011; or Money Services Business Act 2011; or
(b) provides payment instrument network (b) provides Islamic payment instrument
operation which enables payments to network operation which enables
be made through the use of a payment payments to be made through the use
instrument. of an Islamic payment instrument.
18

IFSA
Financial Services (Designated Payment Islamic Financial Services (Designated

Instruments) Order 2013 Islamic Payment Instruments) Order 2013
(a) charge card - a payment instrument which (a) charge card-i - an Islamic payment
indicates a line of credit granted by the instrument which indicates a line of credit
issuer to the user and any amount of the or financing based on Shariah principles
credit utilised by the user must be settled granted by the issuer to the user and any
in full on or before a specified date, without amount of the credit or financing utilized by
any extended credit; the user must be settled in full on or before
a specified date, without any extended
credit or financing;
19

IFSA

(b) credit card - a payment instrument which (b) credit card-i - an Islamic payment
indicates a line of credit or financing granted instrument which indicates a line of credit or
by the issuer to the user and, where any financing based on Shariah principles granted
amount of the credit utilised by the user has by the issuer to the user and where any
not been settled in full on or before a specified amount of the credit or financing utilized by
date, the unsettled amount may be subject to the user has not been settled in full on or
interest, profit or other charges; before a specified date, the unsettled amount
may be subjected to a lesser rebate (ibra’) by
the issuer:
20

IFSA

(c) debit card - a payment instrument that is (c) debit card-i - an Islamic payment
linked to a deposit account at a financial instrument based on Shariah principles that is
institution that can be used: linked to a deposit account at a financial
institution that can be used:
i. to pay for goods and services;
ii. to withdraw cash from automated teller i. to pay for goods and services;
machines or withdraw cash at ii. to withdraw cash from automated teller
participating retail outlets through debit machines or withdraw cash at
card usage by debiting the user’s account; participating retail outlets through debit
or card-i usage by debiting the user’s
iii. for the purposes of sub subparagraphs (i) account; or
and (ii); iii. for the purposes of sub subparagraphs (i)
and (ii);
21

IFSA

(d) electronic money - any payment (d) electronic money - any Islamic payment
instrument, whether tangible or intangible, instrument, whether tangible or intangible,
that: that:
i. stores funds electronically in exchange i. stores funds electronically in exchange

of funds paid to the issuer; and of funds paid to the issuer; and
ii. is able to be used as a means of ii. is able to be used as a means of
making payment to any person other making payment to any person other
than the issuer; and than the issuer; and
(e) any combination of the payment (e) any combination of the Islamic payment
instruments prescribed in subparagraphs (a) instruments prescribed in subparagraphs (a)
to (d). to (d).
22

PRIMARY REGULATION
FSA 2013:
• Section 9 (Application for authorisation)
• Section 12 ( Requirements on minimum capital funds or surplus of
assets over liabilities)
• Section 26 ( Application, annual renewal fees and levy contributions)
• Section 47 ( Power of BNM to specify standards on prudential
matters)
• Section 60 ( Fitness and propriety criteria)
• Section 64 ( Recordkeeping)
• Section 125 (Safeguarding of users’ fund)
23

PRIMARY REGULATION
IFSA 2013:
• Section 9 (Application for authorisation)
• Section 12 ( Requirements on minimum capital funds or surplus of assets over
liabilities)
• Section 23 ( Application, annual renewal fees and levy contributions)
• Section 28 (Duty to ensure compliance with Shariah)
• Section 29 ( Power of BNM to specify standards on Shariah matters)
• Section 57 ( Power of BNM to specify standards on prudential matters)
• Section 69 ( Fitness and propriety criteria)
• Section 73 ( Recordkeeping)
• Section 137 (Safeguarding of users’ fund) 24

SECONDARY LEGISLATION
• Guideline on e-Money
• Submission Requirements for Application for Approval to Operate a
Payment System or to Issue a Designated Payment Instrument or to
be Registered to Provide Merchant Acquiring Services
• Anti-Money Laundering and Counter Financing of Terrorism
(AML/CFT)- Electronic Money and Non-Bank Affiliated Charge &
Credit Card (Sector 4)
• Shariah Advisory Council (SAC)’s Ruling on E-Money as a
Shariah Compliant Payment Instrument (SAC’s 201st Meeting
and 26th Special Meeting on 29 and 30 January 2020)
25

SECONDARY LEGISLATION
Shariah Advisory Council (SAC)’s Ruling on E-Money as a Shariah

Compliant Payment Instrument
• Pursuant to the SAC’s 201st Meeting and 26th Special Meeting on 29 and 30
January 2020.
• Comes into effect upon its publication on BNM’s website on 19 May 2020.
• Applicable to:
(a) approved issuers of Shariah compliant e-money under the IFSA; and
(b) approved issuers of e-money under the Financial Services Act 2013 (FSA)
approved under section 15(1)(e) of the FSA to issue Shariah compliant e-
money
26

SALIENT LICENSING REQUIREMENTS
Initial Capital Requirement
• Sections 12 (4) FSA 2013 and IFSA 2013 respectively define capital
funds” as paid-up capital and any reserves as may be specified by
the Bank.
• Must be maintained at all times while the issuance services of e-
money is being provided.
• Specified in:
a) Financial Services (Minimum Amount of Capital Funds)
(Approved Person) Order 2013 PU(A) 204/2013
b) Islamic Financial Services (Minimum Amount of Capital Funds)
(Approved Person) Order 2013 PU(A) 210/2013
27

CATEGORY MINIMUM CAPITAL FUNDS (MYR)
Large electronic money scheme, i.e. 5m or 8 percent of its outstanding

those storing more than MYR200 per electronic liabilities, whichever is higher
user or keeping outstanding electronic
money liabilities exceeding MYR 1m for
six consecutive months
Small electronic money scheme, i.e. 100,000

those storing less than MYR200 per user
or keeping outstanding electronic money
liability inferior than MYR1m
28

Safeguarding of Users’ Fund
• Section 125 (1)(b) of FSA 2013 and Section 137(1)(b) of IFSA

2013 require the approved issuers of designated payment
instruments to maintain one or more accounts in a licensed
bank for customers, separate from its own account
• The Guideline on Electronic Money contains provisions on
safeguarding users’ funds, depending on the nature of the
scheme.
29

Large electronic money issuers must establish a trust account subject to the
following:
 Funds deposited only for refunding users and paying merchants.

 must ensure that, at all times, the total available funds is, higher than the total
outstanding e-money liabilities.
 Collected funds should be managed and deposited separately from working
capital funds.
 The investment of stored funds only in high-quality liquid MYR-denominated
assets (deposits placed with licensed institutions)
 Investment earnings must not be used for any purpose other than refunding
users and paying merchants if they do not exceed the total outstanding e-money
liabilities.
 Fees and charges in connection with the administration of the trust account must
not come from funds originating from the trust account itself, unless the amount
held exceeds the total outstanding e-money liabilities.
 A copy of the trust deed must be submitted to the central bank.
30

Small electronic money issuers may keep users’ funds in a

deposit account with a licensed institution, but independent from
other accounts and managed by the issuer ,subject to :
 Funds deposited in the account may not have any purpose

other than refunding users and paying merchants.
 Must ensure that, at all times, the total available funds is
higher than the total outstanding e-money liabilities.
 The investment of stored funds is restricted to bank deposits.
 Investment earnings must not be used for any purpose other
than refunding users and paying merchants, if they do not
exceed the total outstanding e-money liabilities.
31

OTHER LICENSING REQUIREMENTS
• Must be a company incorporated under the Companies Act 1965* (para 6.3 Guideline on
Electronic Money)
• A person who to hold the position of director or senior management need to deemed as ‘fit
and proper’, the determination of which shall take the following considerations;
(a) probity, diligence, competence and soundness of judgement;
(b) reputation, character, integrity and honesty;
(c) history of offence(s) involving fraud, dishonesty and violence;
(d) Involvement in deceitful, oppressive or improper business practices
(e) Involvement in a manner which may cast doubt on his fitness, competence and
soundness of judgement;
(f) History of contravene of any provision made by or under any written law appearing to
BNM to be designed for protecting members of the public against financial loss due to
dishonesty,incompetence or malpractice; and
(g) Bankruptcy .
( Appendix 1 Guideline on Electronic Money)
32

ONGOING COMPLIANCE REQUIREMENTS
Reporting
• Issuer shall submit;
Its annual audited financial statements not later than three
months after its financial year end, and any other information
required by the Bank; and
• monthly statistical report on the operation of its e-money
scheme. The statistical information for each month must be
submitted to the Payment Systems Policy Department of the
Bank not later than the 15th day of the following month ( para
13.3 (i) & (ii) GL on e-Money)
33

External Audit Requirement
• Large scheme issuer shall submit independent audit

reports of their e-money systems as and when
required by the Bank ( para 14.3 GL on e-Money).
34

Record Keeping
• Maintain proper accounting records and information (section 64 FSA 2013 and Section 73 IFSA
2013)
• Maintain separate records and accounts for e-money activities from other business activities
(para 7.2 (iv) GL on e-Money)
Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT)- Electronic Money and
Non-Bank Affiliated Charge & Credit Card (Sector 4)
• e-money issuers are required to keep relevant records of accounts, files, business
correspondence and documents relating to transactions, particularly those collected when
carrying out customer due diligence activities ( para 23.1)
• Records must be kept for a period of at least six years from the completion of a transaction, the
termination of a business relationship or date of an occasional transaction (para 23.2)
35

PROF. DR. ASHRAF MD HASHIM
He is the Chief Executive Officer of ISRA Consulting. He is also a Senior Researcher at International
Shariah Research Academy for Islamic Finance (ISRA) and a Professor at International Centre for
Education in Islamic Finance (INCEIF). Dr. Ashraf currently sits on the Shariah Advisory Council of
Bank Negara Malaysia (SAC BNM) as Deputy Chairman and the Shariah Advisory Council of
Securities Commission Malaysia (SAC SC). He is also a member of Shariah Committee for
International Islamic Liquidity Management Cooperation (IILM) and the Chairman of the Shariah
Committee of Bursa Malaysia (Malaysia Exchange House). He also serves as member of National
Fatwa Council of Malaysia. Dr. Ashraf is a registered Shariah adviser with Securities Commission
Malaysia and advises REIT companies, particularly in Singapore.
He is actively involved in many consultations related to Islamic finance in Malaysia and abroad,
among others the Islamic Bank of Australia (Project) and Noor Takaful Nigeria (Chairman of Advisory
Council of Experts). He was also a former member of the Board of Directors of Lembaga Tabung Haji
Malaysia. He is currently serving Tabung Haji as the Chairman of its Shariah Advisory Committee.
Dr. Ashraf obtained his PhD (Islamic Law) from University of Birmingham, United Kingdom. His
Masters in Fiqh and Usul Fiqh from University of Jordan and his BA in Shari’ah from Islamic
University in Medina, Saudi Arabia. He is also a holder of Postgraduate Diploma in Shariah Law and
Practice (DSLP) from International Islamic University Malaysia.
36
SHARIAH PERSPECTIVES
PART 3:
E-Money / E-Wallet
From SHARIAH
PERSPECTIVE
37
OVERVIEW ON E-WALLET BEFORE REVELATION SHARIAH PERSPECTIVE Q&A
1 USERS Shariah Compliant E-Wallet

- End-to-end Shariah compliant product
(E-Wallet Owners) - In line with ESG
2
MOTIVATION SHAREHOLDERS &
Shariah compliant E-Wallet Company
- Listed as Shariah compliant company
& OBJECTIVE OPERATORS - Attracting Shariah compliant investors
- Shariah compliant income
3
Shariah Compliant E-Wallet Company
INVESTORS - Shariah Compliant income
- No need for purification
38
2 Purchase and payment to merchant
Settlement on behalf of the

3 user to the merchant
Fund Placement Settlement
USER Shareholders & Investors
(E-Wallet Holder) MERCHANT

4 Fee
Diagram Source: SAC BNM Ruling on E-Money

1. A registered user places funds to the e-money account
2. The user conducts a transaction with the merchant
3. The approved issuer makes a settlement to the merchant on behalf of the user
4. The approved issuer imposes fees to the merchant based on the contractual agreement between the
approved issuer and the merchant
39

Two Dimensions of Discussion:
Shariah Compliant
1 E-Wallet
Shariah Compliant (From Users Perspective)
E-Wallet Company
(from shareholders and 2
investors perspectives)
40
1) Shariah Compliant E-Wallet
Contractual Relationship between

1 User and E-Money Issuer
Shariah
Compliant 2 Management of Fund Placed
by User
E-Wallet
Some Shariah 3 Reward by Issuer to User
Issues
Transaction involving Shariah
4 Non-compliant Products
41
1) Shariah Compliant E-Wallet
Fund Placement
USER
(E-Wallet Holder)
Shariah issues:
1. Appropriate Shariah contract between User and E-Money Issuer
In ascertaining the applicable Shariah contracts, the SAC has considered the following:
o the role of approved issuer to intermediate payment between the user and the merchant;
o the funds placed by the user is intended for payment purposes. The funds are kept in a trust
account/dedicated deposit account and are managed by the approved issuer; and
o under the BNM E-Money Guideline, the approved issuer is only allowed to:
 10.2(b) - Issue e-money as a payment instrument;
 10.2 (c) invest the funds placed in the trust account/dedicated deposit account in high quality liquid ringgit
asset. (d) Any revenue can only be used if the funds are in the excess of the total e-money outstanding
liabilities; and
 13.1 - No return from the investment shall be distributed to the user
42

Shariah Compliant E-Wallet
Fund Placement
USER
(E-Wallet Holder)
Shariah issues:
1. Appropriate Shariah contract between User and E-Money Issuer (cont’d)
Based on the said consideration, the SAC is of the view that wakalah appears to be one of the suitable Shariah
contracts that appropriately governs the rights and obligations of the contracting parties in an e-money
transaction. The SAC ruled that the application of wakalah in the e-money transaction may be structured as
follows:
o the approved issuer offers agency services to make settlement on behalf of the user to the merchant;
o the user places the fund in a registered e-money account with the approved issuer; and
o the approved issuer establishes trust account/dedicated deposit account to store funds placed by the user,
and shall be used for settlement to merchant or refund to the user.
43

Fund Placement
USER
(E-Wallet Holder)
Shariah issues:
2. Fund Management by the Approved Issuer
 For Shariah compliant e-money, the SAC ruled that the approved issuer must place the funds received
from the user in a Shariah compliant trust account/dedicated deposit account.
 Under the Guideline, the approved issuer is responsible to manage prudently the funds received from the
user. The approved issuer is also allowed to invest the funds and subsequently utilises the return. This can
be construed as a loan (qard) from the user to the approved issuer.
44

Fund Placement
USER
(E-Wallet Holder)
Shariah issues:
3. Reward by Issuer to User - the issue of “benefits to accrue to the lender” (qard jarra naf’an)
The approved issuer may offer rewards for various reasons such as upon subscription to their
service, topping up the balance or utilisation of e-money to make payments to merchants.
Since the funds received from the user may be construed as qard from the user to the approved
issuer, it raises the question on whether the practice of offering rewards contravenes Shariah
principle that prohibits any benefits to accrue to the lender (qard jarra nafàn).
45

Fund Placement
USER
(E-Wallet Holder)
Shariah issues:
3. Reward by Issuer to User - the issue of “benefits to accrue to the lender” (qard jarra naf’an)
The SAC ruled that there is no issue of qard jarra nafàn in the practice of rewards offered by the approved issuer
based on the following considerations:
o the qard contract is only a supplementary contract, which is different from the loan contract for deposit account
offered by banking institutions;
o no inter-conditionality between the funds placed by the user and rewards given by the approved issuer;
o the rewards neither intended nor targeted to reward the amount placed by the user, but rather intended as a
temporary marketing strategy to expand customer participation;
o the Guideline expressly prohibits approved issuers from issuing e-money at a monetary value that is greater
than the amount received; and
o the practice (ùrf) in respect of utilisation of the funds by the approved issuers creates a differentiation from
normal banking business, which renders the qard contract as a supplementary contract. 46


1
USER
MERCHANT
(E-Wallet Holder)
Shariah issues:
3. Utilisation of e-money to purchase Shariah non-compliant goods

For any transaction involving Shariah non-compliant merchants/goods, the status of e-money as a
Shariah compliant payment instrument is not affected, based on the following considerations:
o similar to cash, e-money is neutral, except for a fact that the monetary value is stored electronically;
and
o it is the user’s responsibility to ensure e-money is being utilised for Shariah compliant transactions.
47

E-Money/E-Wallet: Shariah Compliant Issuer

USER
(E-Wallet Holder) Shareholders & Investors MERCHANT
4 Fee
Any approved issuer that is approved under IFSA shall observe the following:
o no transaction with Shariah non-compliant merchants. However, the SAC To:
ruled that in exceptional cases as determined by the qualified Shariah a) Comply with IFSA
b) Ensure halal stream of
advisor of an approved issuer, such approved issuer shall observe the income to shareholders
conditions specified by the qualified Shariah advisor; and and investors
o no product bundling or cross-selling involving Shariah non-compliant
products. 48

Having and dealing with

Shari’ah Compliant E-Wallet
- Offer Shari’ah
Compliant E-Wallet
- Be a Shariah Compliant
E-Wallet company
- Invest in Shariah
compliant E-Wallet
company
49
BEFORE REVELATION LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

ISSUES & CHALLENGES
Issues & Challenges

Faced by the Operator
• Identifying shariah compliant merchant

• The issue of purchase non halal product – Youbeli, Giant
• Marketing material – campaign, promotion
• Offering Islamic and conventional product
50
BEFORE REVELATION LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

QUESTION & ANSWER
QUESTION & ANSWER

SESSION
51
OVERVIEW ON E-WALLET BEFORE REVELATION LEGAL & REGULATORY SHARIAH PERSPECTIVE

Shariah-Compliant E-Wallet Prospects & Challenges (28 October 2020 ISRA Consulting)

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Shariah-compliant E-Wallet:

Prospects & Challenges

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

LARGE VALUE RETAIL PAYMENT

eSPICK, Shared ATM Network, eDebit,

Cheques, Credit Card, Charge Card, Debit

ATM, Internet Banking, Mobile Banking

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Debit card Credit card Charge Card E-Money

 E-money: a payment instrument, whether tangible or intangible that:

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

2016 2020 (Sep)

Source: BNM https://www.bnm.gov.my/index.php?ch=ps&pg=ps_nonbank_emoney 8

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Sources: BNM https://www.bnm.gov.my/index.php?ch=ps&pg=ps_nonbank_emoney; 9

* Large e-money scheme: >RM200

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

E-Money Issuer (Licensed) Non E-Money Issuer

Network-Base Card-Base Open-Loop Close-Loop

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Source: Oppotus Q32019 - https://www.oppotus.com/e-wallets-malaysia-landscape-end-2019/ 13

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

He is currently a Consultant at ISRA Consulting, He also serves as a Shariah Committee

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

eSPICK, Shared ATM Network, eDebit,

Cheques, Credit Card, Charge Card, Debit

ATM, Internet Banking, Mobile Banking

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Submission Requirements for Application for Approval to Operate a

“Any person who intends to operate a payment system or issue a

Division 1 of Part 1 of Schedule 1 of FSA Part 1 of Schedule 1 of IFSA

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Financial Services (Designated Payment Islamic Financial Services (Designated

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Financial Services (Designated Payment Islamic Financial Services (Designated

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Financial Services (Designated Payment Islamic Financial Services (Designated

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Financial Services (Designated Payment Islamic Financial Services (Designated

i. stores funds electronically in exchange i. stores funds electronically in exchange

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Shariah Advisory Council (SAC)’s Ruling on E-Money as a Shariah

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Initial Capital Requirement

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

CATEGORY MINIMUM CAPITAL FUNDS (MYR)

Large electronic money scheme, i.e. 5m or 8 percent of its outstanding

Small electronic money scheme, i.e. 100,000

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Safeguarding of Users’ Fund

• Section 125 (1)(b) of FSA 2013 and Section 137(1)(b) of IFSA

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

 Funds deposited only for refunding users and paying merchants.

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

Small electronic money issuers may keep users’ funds in a

 Funds deposited in the account may not have any purpose

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A

OVERVIEW ON E-WALLET LEGAL & REGULATORY SHARIAH PERSPECTIVE Q&A