ABC launches first Islamic credit card

The Bahrain based ABC Islamic Bank, a subsidiary of the Arab Banking Corporation (ABC), launched the first interest-free Islamic credit card in September.

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By  Massoud Derhally Published  September 24, 2002

The Bahrain based ABC Islamic Bank, a subsidiary of the Arab Banking Corporation (ABC), launched the first interest-free Islamic credit card in September.

Mohammed BuQais general manager of ABC Islamic Bank says he expects Al Buraq to be well received by customers who want to use a credit card that conforms to Sharia law, which bans dealing in interest, considered usury.

The card, backed by MasterCard, will provide benefits similar to normal credit cards in terms of settlement and international recognition. It will be distributed through various retail banks and is intended to be promoted by both Islamic and conventional banks.

“It’s a credit card just like any other conventional credit card. There is an annual membership fee and there are certain fees relating to the underlying transactions,” says BuQais. He declined to elaborate in detail on how the fee structure, which replaces interest, will work.

“To the user, the total cost will not be more than the conventional cost. To the banks, they will be generating returns equivalent to the returns generated by conventional cards,” BuQais pledges.

Banks will be able to issue the card through the International Credit Company (ICC), a newly formed company in which ABC Islamic is a major shareholder, and that has a license from MasterCard to issue the card. ICC is to have two classes of shares, with A shares worth $3 million to be held by ABC Islamic Bank, while B shares will be offered to Islamic banks and finance houses.

For the time being, the card will only be issued in Bahrain. “But our discussions involve a number of banks outside Bahrain within the GCC,” explains BuQais. “At a later stage, it will be an international product.”

Al Buraq is the name of the creature that the Prophet Mohammed is said to have ridden when he made his miraculous night journey. The name has been chosen for its religious connotation and because it represents speed and trust to Muslims.

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