Ujrah
Ujrah is a fee or wage paid for a genuine service or for the use of an asset. In Islamic finance it is legitimate compensation — but only where a real service exists and the fee is not, in substance, a charge for credit.
Also called: ujra · fee · service fee in Islamic finance
Agents under wakalah, lessors under ijarah and service providers of all kinds are entitled to ujrah. The concept matters most in cards, payments and fintech, where an Islamic product has to earn revenue without charging riba on the balance a customer owes.
Some Islamic credit cards and charge cards charge a fixed ujrah for card services rather than interest on the outstanding balance. The analysis turns on whether the fee is for something real — access to a payment network, card services, account administration — and whether it behaves like interest, for example by rising with the amount borrowed or the time it stays unpaid.
In practice
A fee cannot simply disguise interest on debt. A charge that scales with the size or duration of a balance owed is treated as riba whatever it is called.
Example
An Islamic card charges a flat US$15 a month for card services, the same whether the customer owes US$0 or US$3,000. A card that charges 1.5 per cent a month of whatever is outstanding is charging interest, regardless of the label.
Commonly confused with
| Term | How it differs |
|---|---|
| Interest | Interest is a return on money lent that grows with amount and time. Ujrah is payment for a service or the use of an asset, and should not track the size or duration of a debt. |
See also
- WakalahWakalah is an agency contract in which one party, the principal, appoints another, the agent or wakil, to act on its behalf — buying, selling, investing or managing — usually for a fee.
- QardQard is a loan of fungible property — usually money — that the borrower must repay with its equivalent, with no stipulated benefit to the lender. Any benefit the lender requires as a condition of lending raises a riba problem.
- RibaRiba is the prohibited increase at the centre of Islamic finance: an unjustified excess in a loan or in certain exchanges. It is broader than the English word "interest" and is not limited to excessive rates.
- Card SchemeA card scheme is the network that sets the rules for card payments, operates the switch that carries authorisation and clearing messages between issuers and acquirers, licenses the brand, and sets interchange. In the four-party model it neither issues cards nor holds anyone's money.