format_quote Originally Posted by
Abdullah-Basit
Assalam-u-alaykum,
Lately I've given the topic a lot of thought (i.e. riba or 'Usury'). I'm a little confused regarding one matter. I know that asking for more money back than given in the first place is haraam; however, I am confused about trade between two people:
Suppose person A sells a product to person B;however, person A sells his or her product at a higher price than the cost. In this situation, wouldn't the net effect still be the same as Riba since person A is recovering not only the original cost of his or her product, but is also gaining a profit from it?
I know almost intuitively that a person who wants to seek a profit from trade is permissible, but after giving this matter a lot of thought, I am now confused.
If anybody can help clarify this for me, that would be greatly appreciated.
Thank you,
Wa-Sallamu-alaykum.
The concept of usury can be illustrated in the following example:
Suppose you have 2 people selling bags of rice. The two bags are exactly the same in every way, and Merchant A sells his for $80 and Merchant B for $80. Merchant B requires full payment upfront for the rice, but Merchant A allows you the option of paying over time, whereby his bag of rice would cost $100.
It's clear here that the premium in price on Merchant A's bag of rice is due to nothing else EXCEPT for the privilege to pay over time. In this case, the extra $20 you pay is not value derived from the product itself, but being able to pay in installments (ie, he is lending you money).
This is the very essence of usury; you are using money to make money.
Trade, on the other hand, is different, for Allah SWT says in the Qur'an:
"Those who swallow down usury cannot arise except as one whom Shaitan has prostrated by (his) touch does rise.
That is because they say, trading is only like usury; and Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from his Lord, then he desists, he shall have what has already passed, and his affair is in the hands of Allah; and whoever returns (to it)-- these arc the inmates of the fire; they shall abide in it." - The Holy Qur'an 2:275
"O you who believe! do not devour your property among yourselves falsely,
except that it be trading by your mutual consent; and do not kill your people; surely Allah is Merciful to you.” - Holy Qur'an 4:29
We can see in this verse that Allah SWT cleary points out how we should increase our wealth. He has allowed trade, and forbidden usury. So to buy a bag of rice for $50 and sell it for $80 is permissible (so long as you are not taking advantage of someone or price gouging, etc). But to add another premium and allow people to pay over time, this is not allowed. You can allow someone to pay in installments, so long as you do not increase the price of the good because they are paying over time.
So, in conclusion, as long as your business is halal, then it is permissible to make a profit, so long as that profit is due to trading and not because you are lending someone money.
If I have misspoken, may Allah SWT forgive me and I hope others will correct me.