E-COMMERCE IN THE MIDDLE-EAST

The internet is a worldwide system of computer networks that has revolutionized the way we communicate and access information. Nowadays, we are engaging in an internet-based society in which transactions, businesses and commerce are conducted electronically. That is what we call Electronic commerce or E-commerce. This concept is defined as “the process of buying and selling goods and services electronically with computerized business transactions using the Internet, networks and other digital technologies”. The major advantage that carries this new form of commerce is the significant reduction of transaction cost and processing time.


While E-commerce is spreading and becoming more common all over the world, many Muslims are wondering whether this process of conducting transactions is accepted by the Islamic Law, which controls all the spheres of humans’ lives. All types of activities are allowed by Allah as long as they are used for good purposes and operate within the framework of Islamic teachings and principles. The sources of those teachings are contained in the Quran, the Sunnah, the intellect (wisdom) and consensus of religious scientists. In order to ensure the validity of E-commerce there are five stages to follow:

Initiating a contract: First of all, it is important to check the four basic pillars that all contracts, including those related to E-commerce, must fulfill: offer and acceptance; two contracting parties, subject matter and mode of expression. Secondly, the contract should meet all the Islamic requirements.

Confirming the Validity: During the negotiation process, the contract must not involve interests (is forbidden), uncertainty, deceit or fraud and duress (no free consent) and any elements of gambling.

Implementation: The buyer must ensure that the person offering the product is the real owner and has the authority over it. Moreover, it must be ensured that the product is free from any liabilities.

Binding: It has to do with the signing of the contract. Before signing it is important to confirm the existence of the other contracting party. After signing it the parties must keep a contract copy.

Delivery (state of exchange): In this stage the exchange of price and product take place. The most common form of payment in e-commerce is Credit Card, which is forbidden in the Islamic world because of the interests (usury) that it generates. However there are other alternatives, like the payment through bank.

Payment for e-commerce transaction: The Murabahah system, that replaces the credit cards, is the cost plus profit sale. This alternative of payment allows the bank to use it as a credit vehicle.

These five stages should be taken into account while doing any e-commerce transaction with and from Islamic countries. However, those stages are applicable to any type of contract. Until now we can notice that e-commerce is not forbidden but is highly controlled by the religious principles which are at the same time the laws of most of Arab countries. However the conditions of the validity of contracts using e-commerce are almost the same worldwide except for the payment of transactions. For example, although Colombia is a secular state, several principles of our religion have been incorporated as laws and they are compulsory for everyone. The real problem in implementing e-commerce in the Middle-east is that there is a lack of knowledge about it due to the lack of publicity, the attitude of Muslim community and campaigns and exposures about consumer rights. Furthermore, some Arab states restrict the use of internet and manipulate the information.

References:

* Zainul, N., Osman F., Mazlan S.H. (2004). E-Commerce from an Islamic, perspective Department of Information System, Faculty of Information and Communication Technology, International Islamic University Malaysia.
* Images: http://informationaboutbusiness.files.wordpress.com/2009/05/ecommerce.jpg
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