Payment Cards — practice questions

Correct answer: B. Clauses 2/1 and 2/2: Cards involve five parties: issuer, cardholder, card acceptor (merchant), acquirer and card network. On issuance, the issuer–cardholder relationship is the provision of services. On use, the cardholder novates the merchant to the issuer, which pays from the cardholder’s balance (debit card) or from its own funds, so that the amount paid becomes a debt claimable from the cardholder; blocking or deducting an amount to secure dues is a guarantee.

Correct answer: D. Clauses 3/1 and 4/1: A debit card is a settlement, not a credit, instrument linked to the available balance, and may be issued for a fee or free. It must not lead to lending against interest, such as overdrawing for a consideration. Card fees for current accounts may not be exclusively waived or reduced where cards for savings or investment accounts carry fees, since current accounts are loans and such benefits would accrue from a loan (see Shari’ah Standards No. (19) and No. (28)).

Correct answer: A. Clauses 3/2 and 4/2: A prepaid card is a settlement instrument for which the cardholder deposits a specific balance with the issuer, which may be held in local or other currencies. Dealing with it must not lead to lending on interest, e.g. overdrawing the balance for a consideration, and converting all or part of the balance into another currency is subject to the rules of currency exchange (see Shari’ah Standard No. (1)).