Charging Commission On Loan

We understand your query as follows; you requested a person to loan you some money which was forwarded to you via m-pesa. The person that loans the money to you charges you ‘commission’ for using his money for a number of days. He does not consider the money charged by him as Riba rather it is commission according to him.

The ruling of Shariah is as follows; if a person loaned you R100 then you are required to return R100 to him and nothing more. Any amount over and above the R100 charged by him will fall in the category of Riba (interest) which is Haraam in Shariah.

Commission is where a person charges an amount in lieu of offering some service such as selling a property or motor vehicle on your behalf or carrying out some work in lieu of a fixed charge, etc. This is not the case in your query. Here a person is providing a pure loan and taking more than what he has given in return. Although he terms it as commission it does not become commission rather it remains interest/Riba which is Haraam.

The Fuqaha have defined interest as, ‘any extra charge in a mutal monetary transaction that is free of an exchange.’ The extra over the R100 (in our example) that is charged by him is not in lieu of any service or work, rather it is free or void of any exchange hence it is Haraam.