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Fatwa CenterCriteria of currency exchange online
Question
Assalam-u-Alaikum! I am doing Online E-currency Money Exchange Business and Brokery. Online E-currency exchange including these online accounts or payment processor: Liberty Reserve, Payza & Paypal etc. Liberty Reserve is an online e-currency account or payment processor where we can send and receive money only but cannot deposit money directly to our Liberty Reserve Account & cannot cashout directly from Liberty Reserve Account to our bank account or credit or debit card instead we can contact any online international exchanger for cashout money recommended by Liberty Reserve or a local exchanger living in our country. Its mean, in both cases, cashout and deposit money, we must have to contact any exchanger whether it is international exchanger or local exchanger of our country or any individual, and both international and national exchanger will take some fees in order to cashout or deposit your money to your Bank Account, Card or Western Union etc as per request. This is Liberty Reserve Terms of Service. Now, this is what I do: 1) For example: Dollar rate in Pakistan, today is 100RS. Someone want to deposit 100 Dollar in his liberty reserve account or want to purchase 100 Dollar of liberty reserve, he contact me to buy and I have a local exchanger of liberty reserve, which sell me 1 Dollar per 103RS (Dollar today is 100RS but he selling in 103RS by making 3RS his profit, by considering all of his fees and taxes as he deposit by some exchanger to his liberty reserve account). Now, I purchase 100 Dollar in 103 RS rate and sell to another party 100 Dollar in 106RS rate, by making 3RS profit per Dollar. Now, tell me is it profit permissible for me? Can I continue my this exchange business? And I have party, which can sell me daily 100 Dollar in 95RS and I can sell to another party in 100RS by making my profit. So, Can I continue this? Both parties seller and buyer know the current rates of today of Dollar. I am hardly waiting for my answer... Jazakallah
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
If the transaction of exchanging currencies and selling them for each other whether between you and the company or individuals adhered to the Islamic guidelines, then there is no blame on you regarding that transaction and the profits you get from it. The most important of such guidelines is that the exchange should take place in the same meeting of concluding the contract hand-to-hand, physically or in a non-physical way, and amongst its non-physical forms is what was stated in the statement of the Islamic Fiqh Council:
“Among the non-physical forms of receiving the value that are permissible are the following:
1- Transferring money into the agent’s account in the following ways:
a. When it is deposited into the agent’s account, directly or via wire transfer.
b. When the agent makes an immediate currency exchange contract with the bank in case of buying one currency for another on behalf of the agent.
c. When the bank – on the instructions of the agent – deducts a sum of money from another account in a different currency, whether it is in the same bank or another bank, to the benefit of the agent or another beneficiary. The banks should pay attention to ensuring that they act in accordance with the principles of Islamic exchange. The delay in transferring the money before the beneficiary is actually able to take possession of it may be overlooked for the usual amount of time that such transfers take in the banking system, but it is not permissible for the beneficiary to dispose of the currency during this grace period, until the bank transaction takes effect in the sense that it becomes possible to actually receive that sum of money. [End quote]
Also, it is stipulated when selling currency for the same currency to be of equal amounts along with what we have stated that the exchange must take place in the same meeting (i.e. being hand to hand). However, if the currencies are different such as selling a Dollar for Rupee, then it is only stipulated that the exchange must take place in the same meeting, and not be of equal amounts. Accordingly, there is no blame on the company if it sells 1 Dollar for 103 Rupees rate, and there is no blame on you if you sell 1 Dollar for 106 Rupees rate or more, even if that is greater than its value in the market because the most important thing is that the exchange takes place in the same meeting if currencies are different. We have pointed out the guidelines of dealing in currency exchange online in Fatwa 88034, so please refer to it.
Allaah Knows best.
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