Sharia Compliance of Buy Now Pay Later Schemes: Analysis of Contracts and Fatwas

Abstract

Buy Now Pay Later (BNPL) services are rapidly growing as an alternative to digital financing, but they pose serious challenges in terms of compliance with Islamic economic law principles. This study aims to analyse the extent to which the contract structure and key elements of BNPL services are in line with the sharia standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Using a normative-comparative legal approach, this study evaluates the Terms of Service documents of several BNPL platforms in Indonesia and Malaysia. The results show that most platforms do not yet meet the basic AAOIFI requirements regarding contract clarity, ownership of goods before sale, fixed prices, and the prohibition of interest and commercial penalties. This study recommends a Sharia-compliant BNPL model based on murābaḥah or bai’ muajjal, featuring an explicit contract structure, fixed prices, and the application of taʿwīḍ as a non-profit penalty to maintain Sharia integrity and consumer protection.