Optimizing E-Wallet Transactions: A Shariah-Compliant Approach for Malaysia
Optimizing E-Wallet Transactions: A Shariah-Compliant Approach for Malaysia

Summary/Abstract: This study aims to propose a framework and parameters for Islamic e-wallet transactions that can be implemented in Malaysia. The proposal was developed through a documentary review, comparing Shariah rulings on e-money issued in Malaysia and Indonesia. The framework was then validated by Shariah advisors from the banking industry through semi-structured interviews. The study emphasizes that key elements such as Shariah contracts, the management of users' funds, rewards, fee structures, provisions for ewallet usage, and the Shariah committee are critical to ensuring compliance with Shariah principles in e-wallet transactions. By creating a systematic framework for Islamic e-wallet transactions, this study seeks to fill the gap for issuers and promote by greater engagement of service providers within the digital economy. Furthermore, a precise distinction exists between e-money, which represents stored electronic value used for transactions, and e-wallets, which are digital applications that manage and facilitate transactions involving e-money, debit cards, and credit cards. Consequently, the study’s findings and recommendations are useful for banks and non-bank service providers, including regulators, in structuring Shariah-compliant e-wallet transactions.

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