Islamic Credit Card Research Articles

Customers’ Intention towards Shariah Compliant Credit Cards: A Pilot Study

The Islamic finance industry continues to grow, and the Islamic banking and finance sector has made further progress in accomplishing a comprehensive Shariah based-contract regulatory framework. It is important to note that Islamic banking is built to meet the demand for Shariah compliant products and services. Furthermore, Islamic banking products, specifically the Islamic credit cards (ICCs), are catered for both Muslims and non-Muslims as alternative financing products. Unfortunately, the customers are having negative perception towards ICCs. They claimed that the products are similar to conventional credit cards (CCCs) and just merely change in terminologies. The awareness level also affected as the product is not widely promoted and marketed, and has caused the ICCs to lose competitive edge as compared to CCCs. Therefore, the purpose of this paper is to investigate individual intention to have Shariah compliant credit cards, and also to examine the factors that influence intention towards Shariah compliant credit cards. The pilot study carried out on quantitative basis by distributing 100 questionnaires in Klang Valley and applying purposive sampling. Data was later undergoing relationship testing using structural equation modelling (SEM-PLS version 3.2.6). This study has developed a model to measure customers’ intention towards Shariah-compliant credit cards (SC-CCs). The objectives of the proposed model are (1) to explore the dimensions of the Theory of Planned Behaviour (TPB) with the integration of Islam Worldview (IWV), (2) to assess the robustness of TPB and IWV with attitude, subjective norm, perceived behavioural control (PBC), religiosity, knowledge and Shariah compliance in influencing customer behaviour intention towards Shariah compliant financing products. The results showed three constructs i.e. attitude, PBC and Shariah compliance are significant with the intention towards Shariah-compliant credit cards. However, subjective norms, religiosity and knowledge are not significant with intention towards Shariah compliant credit cards.This study will contribute to new strategies of promoting and marketing Islamic financial products. By introducing new innovative approaches; highlighting the key features and benefits of Shariah compliance and compare to the conventional products, and change of product names to Shariah compliant instead of Islamic (e.g. Islamic credit cards to Shariah compliant credit cards), Islamic banking and finance will remain robust and competitive in expanding their market shares.

Islamic Credit Cards: How Do They Work, And Is There A Better Alternative?

Islamic Credit Cards: How Do They Work, And Is There A Better Alternative?

The Influence of Religiosity in Credit Card Selection

The aim of this study is to examine the effect of religiosity on Malaysian cardholders’ decisions in choosing either to have Islamic Credit Card or Conventional Credit Card. To achieve the objectives of this study, 174 selfadministered questionnaires and online survey were distributed among Muslims, which generated 130 usable questionnaires. SPSS software version 22 was used to analyze the data. The result of t-test demonstrated a significant difference between Malaysian Islamic and conventional credit card holders, which implies that religiosity plays a crucial role in the type of credit card holding. This study would assist issuing banks, academicians and policymakers in understanding the role of religiosity among Muslims in the selection of financial products.

Forecasting patronage factors of Islamic credit card as a new e-commerce banking service

Purpose Understanding the important patronage factors of Islamic credit card as a new e-commerce banking service is essential for bankers and users. Although some previous studies have focused on the factors that influence adoption of Islamic credit card, there are few empirical research studies that use a well-established adoption model that helps bankers and consumers to accept and use the Islamic credit card. This study aims to provide such a model to facilitate the adoption of Islamic credit card. Design/methodology/approach In response, a conceptual model was developed that combines the Technology Acceptance Model (TAM) with perceived religiosity (a new developed construct in this study) and trust to explain usage intention of this new banking product. Accordingly, the data were collected from 327 bank customers, and the results supported the applicability of TAM to describe usage behavior of Islamic credit card. Besides, the newly developed construct (perceived religiosity) increased the TAM power regarding explaining adoption of a new e-commerce banking service. Findings Theoretically, the results of this study advocate that perceived religiosity increase the TAM predictive power to clarify intention to use. While, perceived usefulness, perceived ease of use and attitude explained low level of the variance regarding intention to use, by adding perceived religiosity to TAM, these constructs contributed to an increase in the described variance, therefore offering a better explanatory power. In addition, the proposed joint TAM, perceived religiosity and trust explained 57.1 per cent of usage behavior variance. These results are of prime importance, as, to the best of the authors’ knowledge, this is the first study that proves the applicability of TAM for explaining adoption and usage of the Islamic credit card. Originality/value The findings of the current study showed that perceived usefulness is an important factor effecting people’s intention to use the Islamic credit card. Consequently, managers need to first ensure that the Islamic credit card and its services are technically sound and work in an appropriate manner. The focus should be on promoting speed, efficiency and effectiveness of this new product. In financial part, there is a need to reduce the interest rate in the long run to encourage potential users to consider the usage of the Islamic credit card and its offered services.

Islamic Credit Card Adoption Understanding: When Innovation Diffusion Theory Meets Satisfaction and Social Influence

ABSTRACTUnderstanding the main determinants of Islamic credit card (ICC) adoption is important for banks and users. Grounded in Innovation Diffusion Theory, Theory of Reasoned Action, satisfaction, and social influence concepts, this study purposes and empirically tests an integrated model to explore which factors influence acceptance and use of ICC. To test the conceptual model, the data was collected from 967 bank customers and Partial Least Squares (PLS) technique was used to test the forecasting model. Results suggest that intentions to use and attitude toward use of ICC are mostly determined by relative advantage, compatibility, social influence, and satisfaction.

Conceptualizing the Influences of Knowledge and Religiosity on Islamic Credit Card Compliance

Abstract Human behaviour has been widely researched towards a continued understanding of individuals’ decision-making. Consumption behaviour is no exception; to which consumable products are perceived to be complying with certain standards of certification is very essential in particular with regard to product knowledge and religious belief of what halal or permissible is all about. Consumers in general, develop product knowledge through information search, use and experience. This knowledge content is commonly described by consumers in terms of objects or brands, product attributes, usage, ability to discriminate product alternatives and product evaluation respectively. In addition, religiosity may also be posited to influence consumers’ choice and decision-making. In particular, this could be a potential deciding factor for consumers in accepting Islamic financial products. Following these concerns, the proposed study aims to investigate key influential factors i.e. knowledge and religiosity affecting consumers’ adoption of halal concept and principles in Islamic credit card compliance. Specifically, it embarks on a previously unexplored discipline of financial consumer behaviour, and may provide insightful contributions towards understanding consumers’ needs of engaging in a permissible act or transaction of financial product and/or service consumption. Upon addressing such traits that could predict product adoption/ acceptance, financial marketers are expected to educate and stimulate targeted consumers in seeking halal compliant financial related products. Subsequently, this will further elicit future financial product innovation and diffusion amongst marketers within the financial sectors.

Al-Muqassah model

Purpose – The purpose of this paper is to develop a new Islamic credit card model that is in line with Shariah principles and can be adopted as an alternative to contemporary Islamic credit card models by Islamic financial institutions in Malaysia. Design/methodology/approach – This paper is theoretical in nature and mainly based on descriptive research method approach. Findings – The overall findings indicate that the contemporary practice of Islamic credit card in Malaysia is still controversial in its design and operation. Moreover, the adoption and practice of Shariah contracts in bay’ al-inah, tawarruq and ujrah models are not in line with fundamental doctrines of Shariah and are imbued with the practice of hilah (legal trick), which allows them to circumvent the prohibition of riba. The paper indicates that Al-Muqassah model possibly has a comparative advantage in design and operation when compared with the bay’ al-inah, tawarruq or ujrah models. Research limitations/implications – The paper is limited to develop a new Shariah-compliant Islamic credit card model. The paper presents a design and defines the underlying Islamic financial contracts and their working mechanisms in the proposed model. However, it will not address other related areas like consumer perception, legal and regulatory requirements. Practical implications – The paper will have direct implications on contemporary practice of Islamic credit card in Malaysia and elsewhere. The practice of Al-Muqassah model can also possibly have effects on common well-being and economic development. Originality/value – The paper has relevance for Islamic financial institutions offering Islamic credit cards. The proposed model is fully in line with fundamental doctrines of Shariah and performs the key functions of an Islamic credit card.

Between consumer demand and Islamic law: The evolution of Islamic credit cards in Turkey

The elimination of interest from financial transactions has been a salient goal of Islamization movements around the world. Its proponents have had to balance this objective, which they claim to draw from Islamic law (Sharia), against consumer demand for convenient products. In general they have opted to accommodate consumer demand, but surreptitiously, using legal ruses to disguise their compromises. Turkey's experience with credit cards offers a revealing case of the obfuscation in question. Having denounced credit cards as un-Islamic, Turkey's Islamic banks have all proceeded to issue credit cards of their own in order to remain competitive with their openly interest-friendly, conventional rivals. With local variations, the Turkish pattern resembles that of other markets where Islamic credit cards have made inroads. In Malaysia and the United Arab Emirates, too, Islamic credit cards function like those of the conventional banks with which they compete for customers. The “Islamic” features of Islamic credit cards amount to branding. Contrary to the claims of their proponents, they do not involve fundamental financial innovations.

Credit cards preferences of Islamic and conventional credit card

Purpose– The main aim of this paper is to identify whether certain consumers behave irrationally when it comes to select banking products. This paper builds on one of the most significant banking products that is the credit card.Design/methodology/approach– This is an exploratory research paper. Therefore, only descriptive analysis on the differences between three credit card user groups such as the Islamic credit card users, conventional card users and users who decide to use both credit cards, conventional and Islamic, were presented.Findings– The demographic and psychographic factors for the three different groups differ. In addition, there are four factors that influence the credit card selection. The factors are insurance/takaful provided by the credit issuers, cost associated with the credit card, the reward points programme offered and the convenience factors. Furthermore, the study found that three of the factors except insurance/takaful are significantly different between three credit card groups.Research limitations/implications– This paper is limited to the context of Malaysia and the respondents are mostly from the same ethnic. Therefore, it could not be generalised in the context of other countries and further studies comparing different culture or ethnic could benefit and enrich the topic of study.Practical implications– The Islamic and conventional banks could focus on several factors influencing customers’ selection and could focus to improve certain lacking areas as perceived by the consumers. The ability to increase the perceptions of the consumers regarding their credit cards will enable their products to be chosen in the market.Originality/value– There was a significant amount of literature discussed in the Islamic banking selection factors. However, little attention being paid to the selection of a specific bank’s product. This study offers a study that looks into the selection of the credit card offered by the banks in respect to the irrational behaviours of the religious consumers in economic activities as compared to the conventional economists. This paper will contribute to the body of existing literature of banking selection.

Between Consumer Demand and Islamic Law: The Evolution of Islamic Credit Cards in Turkey

The elimination of interest from financial transactions has been a salient goal of Islamization movements around the world. Its proponents have had to balance this objective, which they claim to draw from Islamic law (sharia), against consumer demand for convenient products. In general they have opted to accommodate consumer demand, but surreptitiously, using legal ruses to disguise their compromises. Turkey’s experience with credit cards offers a revealing case of the obfuscation in question. Having denounced credit cards as un-Islamic, Turkey’s Islamic banks have all proceeded to issue credit cards of their own in order to remain competitive with their openly interest-friendly, conventional rivals. With local variations, the Turkish pattern resembles that of other markets where Islamic credit cards have made inroads. In Malaysia and the United Arab Emirates, too, Islamic credit cards function like those of the conventional banks with which they compete for customers. The “Islamic” features of Islamic credit cards amount to branding. Contrary to the claims of their proponents, they do not represent fundamental financial innovation.

Sharīʻah Compliance of Islamic Credit Cards Reconsidered : A Case Study of Malaysia

Sharīʻah Compliance of Islamic Credit Cards Reconsidered : A Case Study of Malaysia

Investigating the Factors That Influence Acceptance of Islamic Credit Card as a New Banking Service

Islamic banking expansion in the world is known as one of the most influential financial incident during the last three decades. These Shariah based banking institutions are necessitated to remain innovative in order to achieve higher market share of spirited banking industry in the world. Accordingly, Islamic credit card as a new innovation has been issued by numerous Islamic as well as dual banking institutions, nonetheless, it seems that this Islamic innovation services has not achieved adequate market share nor adopted by bank customers. Therefore, this conceptual study is an attempt to identify a theoretical framework which on its basis adoption and usage of Islamic credit card be forecasted. In view of that, perceived attributes of innovation which is originated from Rogers’ Diffusion of Innovation theory along with trust as well as demographic factors as imperative indicators of adoption has been applied to provide a new way of Islamic credit card adoption among bank clientele. This study justify the applicably of Diffusion theory into a completely new context which is Islamic credit card adoption. The bank managers and policy makers regarding Islamic banking facilities may consider the study outcome to have better strategy concerning Islamic credit card issuance as new Islamic financial innovation.

KARTU KREDIT SYARIAH DAN PERILAKU KONSUMTIF MASYARAKAT

Islamic Credit Cards and Consumptive Behaviour of Society. The credit card as one means of payment utilising cards, is a payment system that is growing rapidly, brought about by the security and risk of carrying cash in large amounts, efficiency, speed and ease of transaction that is offered. Islamic banks are glancing consumer funding products as one of the products services to be offered. There is a very important limitation that must be realized for Islamic banks, namely the provisions of the shari’a principles regarding the provision of credit card and influence on consumer behaviour society, particularly the Muslim community. It is not impossible for the existence of Islamic credit cards that are presented for the ease of transacting to become a card for the ease of indebtedness and cause a consumptive/wasteful attitude that is definitely forbidden in Islamic economic concept.DOI: 10.15408/ajis.v14i2.1287

An Empirical Study on the Practices of Inah and Ujrah Concept in Islamic Banking Credit Card (Case Study in Malaysia)

The demand for Islamic banking in Malaysia is increasing as well as Islamic product. For instance, the demand for Islamic credit card (known as credit card-i) is rapidly growth as an alternative to replace the current conventional credit card. However, the current practice of Islamic concept has been criticized as such the controversial concept of Inah. However, Inah is continuous practising in Islamic banking product such as Islamic credit card even it is prohibited by majority of scholars (Maliki’s, Hanbali’s and Hanafi’s but allowed by Shafie). It is widely used as an alternative to the interest-based of conventional credit card. Currently, a few Islamic banks in Malaysia came up with other option and offered concept of Ujrah as a substitute to concept of Inah. This paper will analyze the application of ‘Inah and Ujrah in implementing the Islamic credit card and its comparison. Thus, this paper will review an opinion from some Shariah scholars regarding these concepts as it is allowable.

Investigating the Factors That Influence Acceptance of Islamic Credit Card as a New Banking Service

Islamic banking expansion in the world is known as one of the most influential financial incident during the last three decades. These Shariah based banking institutions are necessitated to remain innovative in order to achieve higher market share of spirited banking industry in the world. Accordingly, Islamic credit card as a new innovation has been issued by numerous Islamic as well as dual banking institutions, nonetheless, it seems that this Islamic innovation services has not achieved adequate market share nor adopted by bank customers. Therefore, this conceptual study is an attempt to identify a theoretical framework which on its basis adoption and usage of Islamic credit card be forecasted. In view of that, perceived attributes of innovation which is originated from Rogers’ Diffusion of Innovation theory along with trust as well as demographic factors as imperative indicators of adoption has been applied to provide a new way of Islamic credit card adoption among bank clientele. This study justify the applicably of Diffusion theory into a completely new context which is Islamic credit card adoption. The bank managers and policy makers regarding Islamic banking facilities may consider the study outcome to have better strategy concerning Islamic credit card issuance as new Islamic financial innovation.

Factors influencing Malaysian bank customers to choose Islamic credit cards

Purpose – The purpose of this paper is to explore factors influencing Malaysian bank customers to choose Islamic credit cards. The bank customers generally aware of Islamic credit card facilities in Islamic banks but factors leading them to choose it are particularly unexplored. Given the importance of Islamic credit cards to Islamic banks, the study is aimed at explaining the effects of attitude, subjective norm and perceived financial cost on the Malaysian bank customers' behavioral intention to choose Islamic credit cards. Design/methodology/approach – Drawing upon the theory of reasoned action (TRA), this study suggests a modified model to examine the acceptance factors of attitude, subjective norm and perceived financial cost within a context of Islamic credit cards. This paper extends partial least squares (PLS) to examine the impacts of these factors on the intention to choose Islamic credit cards. The model is tested using a survey data from 257 respondents. Findings – The results reveal that attitude, subjective norm and perceived financial cost significantly influence the intention to choose Islamic credit card. Of these, attitude is first ranked as an influential factor in explaining one's intention to choose Islamic credit cards. All hypotheses are supported. The findings have proven the soundness of the TRA for study in the area of Islamic credit cards. Earlier works in Islamic credit cards have not ready to apply TRA in their works. The current research is thus closed the gap. Research limitations/implications – Pertaining to research limitations, this paper reveals two limitations owing to their future directions for future research on Islamic credit cards. This study indicates that its contributions are particularly confined to potential users in Eastern-Malaysia whilst those from Western-Malaysia are largely untapped. Further research is required to include users from both geographies. Owing to time and financial constraints, this study is only analyzed three factors in explaining the behavioral intention to choose Islamic credit cards. Therefore, future studies in this area should examine new potential factors contributing the receptivity. Practical implications – Findings generated from this study serve as a basis for more future works in the area of Islamic credit cards. The theory developed in the current study's model could also be generalized into other contexts of Islamic banking products and services. Practically, branch managers of Islamic banking institutions are of considerable importance to extend the findings of this study to better future planning of their Islamic credit card services. Originality/value – This study extends the applicability of the TRA model into a newly context of Islamic credit cards. Empirically, this study also integrates the effect of perceived financial cost on the intention to choose Islamic credit cards. This study offers insights with respect to factors affecting one's decision to choose Islamic credit cards.

Sharīʿah-Compliant Credit Cards: An Analysis of Underlying Structures

The purpose of this paper is to provide an analysis of various structures retail clients today. The paper discusses case studies from several jurisdictions to show that various Sharīʿah-compliant contracts or combinations of contracts are being used to structure Islamic credit cards so that customers enjoy similar benefits to those derived from conventional credit cards. It is submitted that Sharīʿah-compliant credit cards which encourage excessive spending (isrāf) should not be promoted on the basis that they counter the basic Sharīʿah principle of moderation and avoiding wastage. Furthermore, the recent financial crises highlighted that the structure of the product will provide little benefits if other factors, such as stringent credit screening processes, need-based analysis and customer’s interests, are ignored or given secondary importance.

Patronage factors of Malaysian local customers toward Islamic credit cards

PurposeThe purpose of this paper is to analyze the probability of Islamic credit card usage intention among Islamic banks' customers. Financial cost, knowledge of Islamic credit card, attitude, financial recommendation and demographic items were examined in order to determine whether these factors are influencing the Islamic credit card usage intention or not.Design/methodology/approachDrawing upon the theory of reasoned action (TRA), this study proposes a conceptual model to examine the factors determining the Islamic credit card usage intention. The research model is evaluated using survey data from 354 respondents with the help of a questionnaire.FindingsThe results reveal that “financial recommendation”, “knowledge on Islamic credit card”, “age (young)”, “marital status”, “religion” and “education level” are significantly affecting the Islamic credit card usage intention. The research also concludes that “attitude on Islamic credit card” appears to have no effect on the Islamic credit card usage intention.Research limitations/implicationsThe research has two limitations. The limitations however provide support for future researches in the area of Islamic credit card. Despite the limitations, the study contributes to the body of academic knowledge by shedding more light onto the factors affecting Islamic credit card usage intention.Practical implicationsInsights reported from this study are of particular importance to bank managers, providing them with an improved understanding pertaining to the Malaysian bank customers' usage intentions for Islamic credit cards. The research helps them to better plan for Islamic credit card facilities, in order to cater for the financial needs of Malaysia bank customers.Originality/valueThe contribution of the research lies in achieving a more profound understanding of Malaysia bank customers' usage intentions for Islamic credit cards. The research manages to discover the factors which particularly determine the use of Islamic credit cards. It also expands the literature on Islamic credit cards.

An Exploratory Study of the Islamic Credit Card Users’ Satisfaction

The Islamic financial system industry is growing tremendously in Malaysia an the existence of the system in parallel with the existing conventional financial system provide an alternative to Muslim consumer in adhering to religious rules and regulation. The rapid development of the Islamic products' creation in the banking system is comparable but customer satisfaction should not be ignore. The researcher proposed to develop a customer satisfaction model for one of the Islamic banking product (i.e Islamic credit card). Research in customer satisfaction is predominant by the quantitative research, but the qualitative research is also getting attention. This paper is a preliminary investigation in identifying if religion has any relationship with Islamic credit card customers' satisfaction.

Perbandingan kartu kredit dan kartu kredit berbasis syariah di Indonesia

Apparently, even causing the pros and contra, the business of credit cards tempts most perpetrators of Islamic banks to make sharias’credit card. Sharia based credit cards have a number of differences than the conventional credit card. One of them is the basic law that refers to the Banking Law, as well as to the Islamic banking law, and the National Fatwa Council of Sharia. In addition, Islamic credit cards are credit cards that implement the wage system (ujrah). In the transaction, Islamic credit card users free of interest and penalties. Penalties only apply to customers who are in default, and the fine is not used as revenue for the bank, but it is distributed to the social fund