The presence of trust hugely determines the uptake of e-commerce in today’s world. Indeed, trust has a significant impact on customers’ motivation, acceptance and willingness to use online transaction. Studies show that lack of trust is one of the frequently cited reasons for the hesitance of customers to embrace this new way of doing commerce. Further, the notion of trust has become a crucial issue for e-commerce as virtual environment entails more risks and opportunities for fraud compared to hand-to-hand commercial trades. With the ever-uprising numbers of Muslim online users among the e-commerce community, it is significant to apprehend the concept of online trust as well as issues related to e-commerce in the light of Shari’a.
TRUST IN E-COMMERCE
The concept of trust is complex and has multi-faceted character. Concisely, trust should reflect the union of three elements namely (i) a trustee to whom the trust is directed; (ii) confidence that trust will be upheld; and (iii) a willingness to act on that confidence. It is therefore concurred as the willingness of trustor to rely on trustee based on the confidence that the trustee will act accordingly.
Studies advocate that a trusting relationship is influenced by trustor’s and trustee’s characteristics. These characteristics help to develop their online credibility, hence, clear up anonymity of online users that stymied the establishment of online trust. Three main characteristics of trustee that cause them to be more or less trusted are ability, benevolence and integrity. Ability refers to skills, competencies and expertise of the trustee; which may include good product knowledge, fast delivery and quality customer service. Whereas, benevolence is the degree of belief to which a trustee, aside from wanting to make legitimate profits, wants to do good to the trustor.
It is interesting to note that religious faith is found to increase benevolence, which in turn influences trusting beliefs and online behavioral intention. Integrity has to do with trustor’s perception that the trustee adheres to a set of principles that the former finds acceptable such as keeping promise and abiding to shopping rules specified on the website. Insufficient information or non-disclosure of the identity between these two parties lowers their level of trust to trade over the Internet. It is necessary to establish confidence level of the trusting parties because any of them may be subjected to the violation of trust during the transactions as they are physically apart and cannot rely on things like physical proximity, handshakes or body signals.
There are a few models available suggesting ways and methods to establish a trusting relationship between online users. One of them suggests that the identity of each buyer and seller must be validated using a unique number known as Assurance Key (AK). Trusted Third Party (TTP) will uniquely generate the AK for every registered consumer, and it is a combination of reference number of state, continent and image of the registered consumer’s face. Buyer or seller is requested to snap and upload his/her picture to the system, which will be matched to the AK. Once the identity is verified, the buyer or seller will be allowed to perform his/her online transaction as electronically reliable consumers. Otherwise, data will be sent to TTP for verification and image update.
Another model sheds light on four dimensions of trust known as merchant trust, content trust, product trust and process trust. Merchant trust refers to the trust attributes on e-commerce website that affect the merchant’s credibility such as business identification, contact details, privacy policy and third party endorsement. These attributes motivate buyers to stay longer and establish transaction with the website.
Content trust involves attributes such as layout, structure, ease of navigation and technical competence that are very crucial to the website. Product trust focuses on attributes of the website that give impact to the product such as brand, features, descriptions and price. Process trust refers to attributes such as on-order guide, purchasing process, payment option and delivery arrangement that give impact to the transaction process provided in the website. 5
It is apparent from this discussion that establishing trust is dependent upon various factors that can be briefly summarised into the followings:
- Trusting the parties involved in online transactions. Here, trustor and trustee need to possess necessary characteristics such as integrity, identification and reputation that may reflect their ability and eligibility to commit online transactions.
- Trusting in the promises made by trustor (e.g. to buy and to pay) and trustee (e.g. to deliver product), which will bring them into the state of agreement upon a set of principles deemed acceptable for them.
- Trusting in the ways how online transactions are accomplished in terms of providing secured and reliable systems to support online activities.
E-COMMERCE FROM THE SHARI’A PERSPECTIVE
From the Islamic perspective, e-commerce denotes the same connotation as of the conventional, except that all transactions must be aligned to the Islamic principles and free from any element of interest (riba), (gambling (maysir), uncertainty (gharar), coercion (ikrah) and forbidden (haram). These prohibitions aim at protecting interests and eliminating harms of parties involved in a transaction, thus promote justice, which is one of the main objectives of Shari’a (maqasid al-Shari’a). As e-commerce involves trading between buyers and sellers, it needs to fulfill three essential requirements of Islamic law of contract as discussed below.
. Form (Offer and Acceptance)
Form of contract consists of offer and acceptance, where an offer refers to the initial proposal made by either party in a contract – seller or buyer. Meanwhile, an acceptance is a statement made by the other party expressing his consent to the terms of offer. Muslim jurists have stipulated some conditions for the validity of offer and acceptance namely connectedness, clarity and conformity. In normal contexts, contracting parties are physically present in one meeting session (majlis al-‘aqd) to negotiate terms of the contract, so that offer and acceptance are connected, clear and consistent.
Concerning e-commerce, there are two scenarios in which offer and acceptance may take place. First, parties are virtually present in the space (though they are at different locations) and the offer and acceptance occur in one meeting place via instant writing such as chatting or teleconferencing. According to the Council of the Islamic Fiqh Academy, the contract shall be deemed as a contract between present parties, for it takes the ruling of constructive meeting place in concluding the contract. Secondly, parties cannot see or hear each other physically or virtually, and offer and acceptance happen through computer screens such as interactive websites and emails.
The Council has also resolved that the contract is complete when the offeror communicates the offer to the offeree and the offeree notifies his acceptance to the offeror. The ruling is based on the opinion of classical jurists regarding the conclusion of contract between inter-absentees, such as through a letter or a messenger. Despite the time and space intervals, the meeting place deems unified as the messenger or the letter constitutes “a representative” acting and offering on behalf of the seller. 7
In e-commerce, we need to determine when the constructive meeting session begins and ends. Some scholars are of the opinion that the session shall be established once a buyer shows his interest in trading by clicking on the advertised item on a seller’s website, and then proceeds to “check out” basket after knowing the specifications and the price. So, the offer occurs when the seller asks confirmation such as “do you agree?”
Meanwhile, acceptance takes place when the buyer confirms the transaction and continues with the payment, thus the contract is concluded.8 This is a very practical view as advertising items for online shopping is similar to normal shopping in the store, where a seller put the goods on shelves and a customer has an opportunity to look at them and the price tags. The offer and acceptance will not happen until and unless the customer picks the goods and proceeds to the counter.
Based on the above, although the offer and acceptance in e-commerce are in various forms including oral (via chatting or telephone), written (via email or messenger), and conduct (via clicking confirmation button on website), they are valid as long as they are connected, clear and corresponding to each other. 2. Contracting Parties (Buyer and Seller)
Contracting parties must be able to perform commercial transactions without any form of coercion, either directly or indirectly, or else, it would be a void contract. Allah says: “O you who believe, do not devour each other’s property by false means, unless it is a trade conducted with your mutual consent” (Quran, 4:29). Having a mutual consent is significant to eliminate the issue of anonymity between the contracting parties. From the technical viewpoint, the issue can be resolved through digital signature that provides a mechanism in which identity of the sender cannot be tampered or changed during the communication with the receiver.
Both parties must also have legal capacity (ahliyyah) and authority (wilayah) in order to execute the contract. Legal capacity is defined as eligibility of a person to acquire rights for himself and exercise them; and authority is described as power of executing the contract.9 Legal capacity is categorised into two, namely acquisition of rights (ahliyyat al-wujub) and execution of rights (ahliyyat al-ada’). The former refers to the eligibility of a person to acquire rights for and upon him while the latter is the eligibility of a person to execute or discharge his rights and duties in a manner recognized by the law.
Allah says: “O you who believe, do not devour each other’s property by false means, unless it is a trade conducted with your mutual consent” (Quran, 4:29).
However, the question that arises in e-commerce is how to determine the legal capacity of contracting parties. As e-commerce takes place between either an individual or a company with a website; in the case where the buyer is an individual, therefore determining his legal capacity is less hassle because his modes of payment – such as via debit or credit cards – shall prove that he has attained the legal age and has an authority in executing the transaction. Meanwhile, if the buyer or seller is a company, the determination of its legal capacity depends on the certificate of approval from the relevant authority.
It is important to note that Muslim scholars, however, have different opinions with regards to a company being a legal entity, in which it has the rights and responsibilities similar to a living person. Classical Muslim scholars opine that legal entity does not exist in Islam for a very simple fact; a company cannot be regarded as “a person” because it is only a fictitious and an imaginary person, as such, has no capacity to engage in any commercial transaction.
Nevertheless, some modern jurists such as al-Zarqa and Abu Zuhrah justify the existence of entity other than human being as a legal person based on the fiqh known as al-dhimmah (guarantee or accountable). This stance is further propagated by a modern Muslim jurist named Taqi Usmani.10 Taking waqf (endowment) as an example, he argues that waqf is a legal and religious institution in which a person donates some of his properties for a religious or charitable purpose.
After the properties have been declared as a waqf, they no longer remain in the ownership of the donor. Likewise, the beneficiaries of the waqf can benefit from the corpus or the dedicated properties but they are not the owners. If, for example, a property is bought with the income of a waqf, it shall be treated as a property owned by the waqf. This indicates that waqf is similar to a living person who can own the property and thus, its transaction is legal in the view point of Shari’a.
3. Subject Matter (Object and Price)
Subject matter must fulfill several criteria for a contract to be valid. They must be lawful, valuable, in existence, deliverable and precisely determined. If the subject matter is uncertain and ambiguous, the contract will become void. Further, it must exist at the time when the contract is made and it should be possible to be delivered at the agreed time of delivery. In this regard, the subject matter must be clearly known to the contracting parties through which it should be precisely identified and described.
Lack of knowledge about the subject matter and its characteristics may invalidate the transactions. Details of the subject matter could be obtained whether by means of physical viewing, indication or description. In this regard, e-commerce website may precisely describe the subject matter through texts and pictorial displays.
The mode of payments in e-commerce needs an appraisal from the Islamic perspective; as there are different e-payment systems widely used in e-commerce including e-cash, direct online or mediated credit/debit payments, e-cheques, storedvalue money and e-bill payments. Credit card, in particular, is an essential mode of payments in e-commerce. It represents a loan relationship between card bearer and issuer. In Islam, the issuer is not entitled to receive more than the amount taken to purchase goods to avoid interest (i.e. riba al-nasi’ah). Nonetheless, the issuer can charge a fix amount of fees known as administrative expenses or service charges if they are not increasable due to the increased amount of purchase.
The Council of the Islamic Fiqh Academy issued a resolution pertaining to the use of credit card; (i) it is not permitted to issue uncovered credit cards or to deal in them if there is a condition that fixes usurious increase even if a user intends to pay up within a given free period; (ii) it is permitted to issue uncovered credit cards as long as there is no condition that fixes usurious increases to be added to debt; and (iii) it is permissible to use covered credit cards for buying gold, silver or currencies.11 Therefore, it is permissible to issue and use credit card for e-commerce transactions as long as it is consistent with the Shari’a requirements and principles.
Furthermore, since e-commerce transactions usually involves objects being delivered in the future, hence items such as gold, silver and other usurious items cannot be traded to avoid interest (i.e. riba al-buyu’). This is because the tradability of these usurious (ribawi) items should fulfill two conditions, (i) equal value and hand-to-hand, if they are within the same genus; and (ii) hand-to-hand only if they are from different genus based on the narration of the Prophet. Therefore, online transactions of the usurious items are not permitted because they violate the hand-to-hand condition.
Pertaining to future delivery of all non-ribawi goods, particularly those delivered via postage, scholars argue that the transaction is neither future sale (bay’ al-salam) nor sale of debt with debt. Instead, future delivery of goods in e-commerce is due to the nature of transaction itself, which happens between interabsentees, hence entailing an intermediary, i.e. mail carrier to deliver goods to the buyer. In this context, time gap between payment and delivery of the goods does not invalidate the e-commerce transactions.
MODEL FOR BUILDING ONLINE TRUST VIA SHARI’A COMPLIANT E-COMMERCE
Shari’a compliant e-commerce can be postulated through the fulfillment of the essential requirements of Islamic law of contract that consequently may influence the presence of online trust among users in the Internet-enabled environment. It concurs with the existing literature that religious teaching, customs and traditions are important determinants of trust. Being able to resolve Shari’a issues related to e-commerce may satisfy religio-centric attitude of Muslims online users that consequently result in the success of e-commerce environment.
CONCLUSION
As e-commerce is anticipated to replace the current way of doing commerce and to greatly contribute to the nation’s economical development, Muslim online consumers and entrepreneurs need to be more proactive in embracing this new mantra of today’s commercial industry. By embracing the spirit of Shari’a-compliant e-commerce, users can have stronger trust to conduct their business transactions via online.
