An Overview of Islamic Sharia Issue Regarding Mobile Money Transaction Mpesa in the Republic of Kenya (original) (raw)

The Overview of Sharia Principles on BSI Mobile Banking

Al-Iktisab: Journal of Islamic Economic Law

Information technology that has developed so rapidly in recent years has directed the focus of large banks to digital services, including mobile banking. The internet's rapid growth is changing how companies connect with their customers, and the banking business is no exception. Of course, the concept of blessing must be prioritized by every Muslim, especially in banking institutions. This research aims to analyse the BSI Mobile application's existing mobile banking service system. In 2021, Bank Syariah Indonesia (BSI) started to merge 3 (three) Islamic commercial banks in Indonesia, at the same time, to support the development of information technology (especially in banking), BSI has also created a BSI Mobile application to facilitate transactions. This research is qualitative research with a grounded research approach and uses a qualitative descriptive analysis method. However, even though the service system in the BSI Mobile application has met customer needs and is under the basic principles of sharia, many customers or the Muslim community who have not used it do not even know the system and application. Ultimately, it will impact applications that cannot be utilized optimally. Based on the results of research that the researcher have done, the BSI mobile banking service system should emphasize the publication and socialization of BSI Mobile products with various methods, including approaches that use sharia principles because legal regulations will be applied due to threats and legal causes that occur.

Challenges Facing the Development of Islamic Banking. Lessons from the Kenyan Experience

The purpose of the study was to investigate the challenges facing the development of Islamic banking in Kenya. The research designed for study was a case study approach focusing on four Islamic compliant banks in Kenya. These are:-First Community Bank; Gulf African Bank; Dubai Bank; Kenya commercial Bank Ltd and Barclays Bank Ltd. The population of the study consisted of 33 customers, who were the holders of accounts in the respective banks and 11 managers. Sample data collected by use of questionnaires administered by the researcher and a research assistant. Data analysis method used is based on the quantitative approach using descriptive statistics: mean, mode, and median. Frequency tabulations and cross tabulations were used to bring out the finding of the study. The study revealed Islamic banking compliant was driven by religious compliance and customers need being met. It also revealed that continuous review and improvement of shariah compliant products together with diversifying market niche will lead to drastic development and marketing of Islamic banking products. From the study the following conclusions were drawn: firstly, the factors that influence development of Islamic banking products in Kenya are purely religious compliance and customers need being met.

Barriers to Uptake and Use of Added Value Mobile Money Products by the Lesser off Segments in Kenya

International Journal of Innovative Research and Development, 2018

Introduction Mobile money systems have characterized the execution of monetary transactions in Kenya in recent years. As of December 2013 (CCK, 2014) 26.1 million subscribers were active in various forms of mobile money transactions among them money transfers, mobile banking, payment systems or other forms. Populations excluded from formal financial services in Kenya have been the target through agency networks whose number stood at 93,689 as of December 2013 and mobile phone subscribers whose number increased from 29.2 in 2012 to 31.03 in 2013 (CCK, 2013). Driving the exponential transformation is the acute lack of formal financial services particularly in rural areas, in addition mobile money products on offer have been designed to address needs that target poor and marginalized populations. For this reason, even populations that were in urban areas but excluded from existing financial services due to unsuitable models (Mulwa & Ndati, 2013) have found mobile money systems friendly and accommodative of their specific needs. Such needs include convenience of operating hours, amounts of transactions, any time anywhere access, privacy, intermediation among others. However, these perceived benefits of mobile money risk going to the drain if the statistics of the actual relevance to financial inclusion is anything to go by. According to Global financial data, 75% of Kenyan adults have a bank account, 63% of these being mobile money accounts (intermedia) however while 93% of the richest are formally included 55% of the poorest are completely excluded from formal and informal financial services. 1.1. Problem Statement Money transfer models in Kenya have remained fairly stable since the inception of m-pesa in 2007, these has seen financial inclusion models emerge seeking to ride on these services to provide solutions to a wide range of user needs and more specifically reaching the unreached financially. Among them are savings and credit platforms like M-ASCA (Mobile Accumulating Savings and Credit Association) that seek to streamline operations of the informal sector dominated by Rotating savings and credit associations (ROSCAs) and accumulating savings and credit associations (ASCAs) by automating the entire processes that begin at registration through saving borrowing getting guaranteed and general management of user accounts. According to FSD Kenya (2009), a total volume of Kshs 65 billion is intermediated through ROSCAs and ASCAs on an annual basis. Others target payment of services, the most popular being lipa na m-pesa by safaricom, a product that has proliferated practically every form of payment in Kenya including government services like renewal of driving licenses, payment of fines in courts among many others. Delivery of these products has been met with an outcry from various stakeholders in regard to exorbitant tariffs in money transfer services, lipa na m-pesa tariffs (CGAP, 2015), coexistence of the telecom and the banking sector as seen in the recent outcry by the Equity Bank CEO, Dr. James Mwangi over the increase of charges in the transfer of funds from m-pesa to bank accounts (Frankline Sunday, 2015), differentiation of services; in that those who wish to save

The impact of mobile banking use on the Islamic financial institutional interest: A study in Indonesia

Banks and Bank Systems

M-banking is one of the services that Islamic banking provides to its users. With M-banking, customers can more easily obtain information without queueing at the bank. This study investigates the impact of Islamic mobile banking on customers’ interests. To explore the phenomenological impact, this study used a qualitative approach by applying in-depth interviews with 15 Islamic M-banking users from various backgrounds. This study analyzed the data by data reduction, display, and conclusion. The conclusion of this study revealed some positive and negative effects on the users. The positive effect is that it saves time, especially for students and workers who are busy with their daily activities. The available features and facilities such are credit purchases and online Islamic social payments ease them in saving time. However, there are also negative consequences for users. Some customers are susceptible to data theft by irresponsible people and face difficulties in using sophisticat...

M-Pesa: A Case Study of the Critical Early Adopters' Role in the Rapid Adoption of Mobile Money Banking in Kenya

This study reviews key factors that led to the phenomenal growth of mobile money banking services in Kenya using M-PESA, "mobile cash money", the leading mobile money service provider as a case study. The study considers the outstanding challenges experienced by users, possible solutions and future trends. These aspects are covered through a critical review of existing literature, secondary data and a survey targeting mobile phone users living in the major urban centers, considered to be the early adopters of new technologies in Kenya. Several lessons learnt from the mobile money rollout in this Kenyan experience are identified for future researchers and practitioners.

Prospect of Islamic Electronic Money in Indonesia: Case Study on the LinkAja Application

JESI (Jurnal Ekonomi Syariah Indonesia)

This research conducted to see how the prospects for electronic money in Indonesia, considering the launch of new electronic money launched this year through the LinkAja application. This application has received a fatwa from the National Sharia Council of the Indonesian Ulema Council (DSN-MUI) to be a strong source of law for application in Indonesian society. The emergence of LinkAja electronic money is one of the policies of all stakeholders because the potential of sharia-based electronic money is quite large, apart from Indonesia having the world's largest Muslim population. The method that the author made is a qualitative method besides reading several journals and reading material about Islamic electronic money. The prospect of newly launched electronic money certainly has several challenges and opportunities that can be used as lessons for relevant stakeholders. Apart from the competition with the same applications as conventional-based electronic money, Indonesians are ...

Digital Payment Transactions: Islamic Finance Perspective

Journal of Advanced Research in Applied Sciences and Engineering Technology, 2023

This paper provides an in-depth analysis of the implementation of Islamic finance contract (akad) in digital payment and Payment Technology (PayTech) transactions. With the rise of FinTech, digital payment has become a crucial component of the financial industry. However, implementing muamalat contracts in PayTech poses challenges related to unclear contracts, the relationship between parties, and security. The primary objective of this study is to identify the various types of online payment transactions and suggest alternative solutions to the Shariah issues that arise. To achieve this, the study adopts a qualitative methodology, which involves conducting library research and interviews with e-payment providers. The findings of the study shed light on several factors concerning Shariah issues and differences in the implementation of e-payment products and contracts. The paper aims to address the gap in previous literature by providing comprehensive insights into the implementation of Shariah-compliant PayTech transactions. The study recognizes the importance of refining the modus operandi of payment transactions when using new technology and ensuring compliance with Shariah principles in Islamic finance and banking. By doing so, the study contributes to the development of the Islamic finance industry, which is currently experiencing a surge in demand for Shariah-compliant financial products and services.

Qualitative Analysis of Maqasid Al Shariah Based Model in Islamic Banks: A Way Forward

Journal of Economic Impact

Islamic banking has made tremendous growth in the last few years all over the world. However, people are not satisfied with the performance of Islamic banks with respect to their contribution to alleviating poverty and equitable distribution of wealth, achievement of socio-economic welfare, and human well-being. Therefore there is a need to critically review the current practices of Islamic banks and assess the need to develop a model of Islamic banking in the light of Maqasid al Shariah which can contribute to socio-economic welfare and human well-being of people by eradicating poverty and concentration of wealth. For this purpose, this study employs exploratory, qualitative research in which semi-structured face-to-face interviews are conducted with renowned Shariah scholars, Shariah Supervisory Board (SBB) members of Islamic banks, and renowned academicians. The grounded theory research approach is used in this study using NVIVO data analysis software. The results of this study s...

Elements Enhancing the Use of Mobile Phone Money Services: A Case of Homa Bay Region, Kenya

The history of mobile payments is more than 10 years old and mobile money services in various countries such as Finland are still relatively unpopular, even though consumers have shown clear interest towards mobile money. The Mobile phone banking idea was initially born out of the intention to reach the unbanked poor. There exist a spectacular mobile phone money service divide, highly skewed against the rural population. The study therefore, established mobile phone elements enhancing mobile money services, in Homa Bay Region. A sample size of 48 participants for semi-structured interviews, focus group discussion and participant observation was used. The data for the study was both primary and secondary. Interview was the main tool for primary data collection, supported by focus group discussion and participant observation, while secondary data was obtained from online journals, books and Daily Newspapers. Data was analyzed using thematic analysis. The study established that remittances had a positive influence on mobile phone money use, while lack of National Identification cards as well as lack of information by some users had a negative influence on mobile phone money use in the study area.