1. Introduction

Buy Now, Pay Later (BNPL) has rapidly gained traction around the world, reshaping how consumers access goods and services. Instead of traditional credit cards or loans, customers can split payments into equal installments with minimal upfront costs. A lot of companies are dominating headlines and consumer habits, particularly among younger, tech-savvy demographics.

However, for the 1.9 billion Muslims globally, a crucial question arises: Is BNPL compliant with Islamic finance principles? Many conventional BNPL models include hidden charges, late payment penalties, or structures that resemble interest-bearing loans — all of which may conflict with core tenets of Sharia law. This blog explores how BNPL can be restructured to align with Islamic finance principles and how modern fintech platforms like Fimple can support such transformation.

2. How Fimple Supports Sharia-Compliant BNPL

Fimple is proud to be the first core banking platform to natively support Sharia-compliant BNPL  combining Islamic finance principles with modern fintech innovation.

Fimple’s platform provides a robust foundation for creating Sharia-compliant BNPL products. With a focus on flexibility and automation, Fimple enables financial institutions (FIs) and fintech companies to design and offer BNPL services that strictly adhere to Islamic finance principles. Here’s how Fimple plays a critical role in transforming BNPL into a Sharia-compliant model:

1. Prebuilt Islamic Finance Contracts

Fimple offers prebuilt workflows for core Islamic finance contracts such as Murabaha and Ijara, which are essential for creating compliant BNPL products. These contracts are fully integrated within Fimple’s platform, enabling institutions to quickly set up Islamic financing solutions without needing to manually code each contract’s terms.

For example, when using Murabaha-based BNPL, Fimple’s platform automates the purchase and resale of goods at a disclosed markup, ensuring that the markup is fully compliant with Sharia principles. Similarly, for Ijara-based BNPL, Fimple supports lease-to-own models, ensuring smooth integration of rental payments, asset ownership, and compliance with the Islamic principle of asset-backed transactions.

2. Customizable Parameterization Engine

One of Fimple’s core features is its parameterization engine, which allows FIs to customize the BNPL product’s markup rates, grace periods, and repayment structures. This enables institutions to fine-tune their BNPL offerings while remaining compliant with Sharia law.

For example, banks can set fixed markup rates in Murabaha contracts that do not compound over time, ensuring transparency. Fimple also allows customization of grace periods for repayments, providing an ethical alternative to punitive late fees, which are prohibited under Islamic law.

3. Sharia Audit Logs & Governance

Sharia compliance is integral to every transaction. Fimple ensures that all activities related to Islamic BNPL are logged in immutable audit trails. These logs are reviewable by Sharia boards, allowing for complete transparency and verification of compliance at any stage of the process. This guarantees that every transaction adheres to the ethical principles of Islamic finance, with no hidden interest or risk transfer.

Fimple’s built-in audit functionality provides an accessible way for financial institutions to monitor, review, and ensure Sharia compliance throughout the lifecycle of each BNPL product. The ability to track every step — from the purchase to the final repayment — ensures complete accountability.

4. API-First BNPL Architecture

Fimple’s platform is designed with an API-first architecture, which makes it easy to integrate BNPL systems directly into merchant platforms. This seamless integration allows FIs to offer BNPL at the point of sale, making it convenient for both merchants and consumers. Importantly, Fimple ensures that every transaction made through its system adheres to the Murabaha or Ijara structures, avoiding the pitfalls of conventional BNPL systems, such as hidden fees or interest.

The API-first approach allows financial institutions to provide an efficient and fully Sharia-compliant BNPL solution across a wide range of e-commerce platforms.

5. No-Code Business Rules Engine

Fimple’s No-Code Business Rules Engine empowers financial institutions to define their own business rules for BNPL repayments, customer eligibility, and handling of late cases, all without writing a single line of code. This easy-to-use interface allows users to configure the product’s rules in a drag-and-drop environment, ensuring that every step of the process — from repayment scheduling to handling payment defaults — is in line with Sharia principles.

Fimple ensures that no hidden fees are imposed on customers, that grace periods are structured fairly, and that all penalties (if any) comply with Islamic law. With the flexibility of Fimple’s system, banks and FIs can create a compliant and user-friendly BNPL service.

3. The Problem: Where Conventional BNPL Conflicts with Sharia

Islamic finance is governed by foundational principles rooted in fairness, transparency, and risk-sharing. When evaluating BNPL through a Sharia lens, several red flags emerge:

• Riba (Interest): The most significant concern is the presence of interest or late fees. If a customer delays a payment and is charged additional money simply for the delay, this is classified as riba — strictly prohibited in Islam.
• Gharar (Uncertainty): In many BNPL models, the full terms of the agreement — especially around penalties, ownership rights, and dispute handling — are not clearly disclosed, violating the Islamic requirement for contractual clarity.
• Unjust Risk Transfer: Some models place all risk on the customer without the BNPL provider ever taking ownership of the goods. This can be seen as an unfair risk transfer, which Sharia aims to avoid.

4. The Solution: Sharia-Compliant BNPL Structures

Islamic finance offers contract models that can be adapted to create fully compliant BNPL systems without compromising consumer convenience or fintech innovation.

A. Murabaha-Based BNPL

Murabaha is a cost-plus sale contract. In this model, the BNPL provider purchases the item from the merchant and sells it to the customer at a disclosed profit margin. The customer agrees to pay this amount over an agreed-upon schedule.

How it works:

• A mobile phone is worth $500.
• The BNPL provider purchases it and sells it to the customer for $580 (markup disclosed upfront).
• The customer pays $580 in 6 monthly installments of ~$96.67.
• There are no hidden fees, and the markup is fixed.

This method complies with Islamic principles because:

• The transaction involves actual ownership by the financier.
• The profit (markup) is known and agreed upon.
• There is no interest or compounding.

B. Ijara (Lease-to-Own)

Ijara allows the customer to use the asset while paying rental installments, with the option to own the asset at the end of the term.

How it works:

• The BNPL provider leases a refrigerator to the customer.
• The customer pays monthly rent for 12 months.
• After the term, ownership is transferred (either via gift or final payment).

This model is useful for expensive, durable items and allows flexibility if the item is returned or faulty.

5. How to Ensure Compliance in BNPL Systems

Designing a compliant BNPL product goes beyond the contract type. The platform and processes must be carefully crafted:

• Clear Contractual Terms: All profit margins, due dates, and conditions must be clearly disclosed at the outset.
• Ownership Flow: The financier must take ownership of the asset, even briefly.
• No Interest or Late Penalties: The total amount payable is fixed; no extra charges are allowed for delays.
• Grace Period Handling: In case of hardship, platforms can offer deferred payment or social finance solutions instead of punitive measures.
• Sharia Governance: All workflows should be auditable and reviewable by Sharia boards.

6. Case Study Example: Sharia Complaint BNPL for Electronics

Let’s say a BNPL provider using Fimple wants to offer Sharia-compliant financing for electronics.

• A customer chooses a $1000 laptop.
• The BNPL provider purchases it and resells it to the customer for $1100.
• The markup is fixed and disclosed at the time of purchase.
• The customer pays $183.33 monthly for 6 months.
• There are no interest fees, no penalties for delay (although goods can be repossessed), and all transactions are logged in Fimple’s immutable audit trail for Sharia review.

This model allows for ethical, transparent credit access while maintaining Islamic compliance.

7. Conclusion: The Future of BNPL – Embracing Both Sharia-Compliant and Conventional Models

As demand for inclusive and transparent financial solutions increases, Islamic BNPL provides a model that caters to both faith-based and secular consumers seeking fairness. By utilizing established Islamic finance contracts and leveraging modern fintech platforms like Fimple, we can offer solutions that are both Sharia-compliant and commercially competitive. 

With Fimple BNPL doesn’t need to rely on  interest or unfair practices. With the right structure, it can be scalable, impactful, and fully aligned with Islamic principles.