UAE Islamic Bank's new regulations: hookah and e-cigarette shops are not allowed to use bank cards

UAE Islamic Bank's new regulations: hookah and e-cigarette shops are not allowed to use bank cards

The Islamic Bank of the United Arab Emirates has for the first time banned the use of its issued credit and debit cards in shops selling water and electronic cigarettes to comply with religious legal requirements.

According to Emaratalyoum's report on October 14th, credit card issuing banks licensed under Islamic law have for the first time banned the use of their credit and debit cards in shops selling "hookahs" and electronic cigarettes. Customers holding this type of card have confirmed that all these stores no longer accept card payments from relevant banks, and any attempt to use this type of card in these places will be rejected.

Financial expert Amjad Nasser pointed out that Islamic banks distinguish the nature of their sales stores based on specific codes provided by Visa and MasterCard companies to comply with legal requirements, and these stores are classified as operating activities that do not comply with Islamic law. Therefore, in these places, Islamic bank cards cannot be used for direct debit or credit payments.

He added that the bank card system of Islamic banks has been programmed to reject transactions from such shops. This regulation is stated in the terms and conditions of all categories of Islamic bank cards.

Nasser continued to explain that transactions may sometimes be made on these cards, but when reviewed, whether from religious institutions or central banks, transaction records are checked. If any illegal transactions are found, the bank will be required to stop such illegal transactions and strictly implement the established operating system.

He also mentioned that it is expected that all Islamic banks will implement this policy within the country. Although some religious institutions in other countries consider credit cards to be the "personal property" of cardholders, allowing them to freely dispose of and bear the consequences, in the United Arab Emirates, religious institutions have reached a consensus not to allow the use of cards issued by Islamic banks to purchase goods that do not comply with Islamic law.

According to an article by the Business Advisory Office of the Chinese Embassy in Indonesia, Islamic banks do not operate and manage according to the traditional commercial banking model, but based on the teachings of the Quran. They differ from traditional commercial banks in daily management, interest payments, business areas, risk control, and relationships with lenders. In the past 10 years, the global Islamic banking industry has grown at an average annual rate of over 10%, with a current total operating value of $700 billion to $1 trillion, becoming an important component of global assets. More than 300 institutions from over 75 countries are involved in the development of this industry worldwide.

Introduction to Islamic Bank | Image source: Commercial Affairs Office of the Chinese Embassy in Indonesia