Shar'ia Compliant Electronic Payment Systems - Libyan Case Study

The exponential growth of e-commerce borne from globalisation has fuelled the use of e-payment systems that are clearly a prerequisite business practice given that Internet consumers must pay for products and services. It is acknowledged that credit card payment is the foremost method for on-line purchases. However in Islamic countries, such as Libya, religious and ethical barriers prohibit the earning of interest [Riba] that is commonly associated with e-payment methods because it contravenes the Islamic concept of Shar’ia. Our longitudinal research aims to propose a Mudaraba driven business model which relates to earning profit rather than interest, as a potential solution to facilitate easier use of credit cards for e-commerce activities in developing countries such as Libya. In this research paper we present findings from an initial study, utilising a group of business professionals in the Libyan banking sector, to establish the current status of e-payment business practices and the awareness of