Are loyalty programs Halal?
29 April 2023
Georgette Mikhael

In recent years, loyalty programs have become increasingly popular among businesses as a means to reward and retain customers. However, for those practising Islam, questions may arise about the permissibility of participating in such programs.

Loyalty programs are designed to incentivise customers to make repeat purchases by offering them rewards or benefits. These rewards may include points, discounts, or other incentives that can be redeemed for products or services. While these programs are generally seen as a way to increase customer loyalty, some may question whether they are compatible with Islamic teachings.

Are loyalty programs Haram or Halal (forbidden or permitted)?

The general sentiment, from an Islamic perspective, is that the permissibility of loyalty programs depends on the nature of the rewards and benefits offered. According to Islamic principles, any transaction that involves riba (interest or usury) is haram or prohibited. Therefore, if a loyalty program involves earning or redeeming rewards on products based on interest or other prohibited activities, it would be considered haram.

Similarly, if the rewards offered by a loyalty program involve the consumption of haram products or services, then participating in the program would also be considered haram. For example, if a loyalty program offers rewards that can only be redeemed for alcoholic beverages or pork products, then it would be considered haram for a Muslim to participate in such a program.

Some Muslims may conduct in-depth research into the business offering the loyalty program. While the program itself may not have haram elements, there may be other wider business practices, alliances, investments, social stances or political alliances that give unease to a devout practicing muslim which may result in complete non-association with the brand.

Max Brenner is a brand that received negative public backlash in the form of anti-Israeli protests in Australia in 2011 due to the donation of chocolate care packages to Israeli soldiers which was seen to support the oppression of Palestinians (over 80% who are Muslim). See: Max Brenner Loyalty: Choc-full of Brenner-fits.

Why is interest haram?

Muslims oppose interest, or riba, as it goes against the holy teachings of the Qur’an and Hadith (the collected traditions of the Prophet Muhammad PBUH, based on his sayings and actions). Interest is seen as exploitative, benefiting the lender at the expense of the borrower and leading to financial injustice. Islamic finance follows the principle of risk-sharing, where both parties share in the profits and losses of a venture.

The Qur’an also prohibits usury, the practice of charging excessive or unfair interest on loans, which is seen as oppressive. Islam promotes fairness and justice in financial transactions and values generating wealth through productive economic activity, rather than exploiting others through interest.

Are credit card loyalty programs haram?

Most likely, yes.

According to the Islamic perspective, credit cards are considered haram,. The reason behind this is that the bank or financial institution which provides credit cards to its customers lends money in exchange for interest, which is known as riba, and riba is strictly prohibited in Islam.

However, there is some discussion on this topic among Islamic scholars. Some scholars consider pre-paid cards permissible to use, as they do not involve riba or interest. These types of credit cards are covered by pre-deposited money in the card account and do not involve any interest on the balance.

When in doubt, it is advisable to consult with the local Sheikh, Islamic scholars and/or experts to seek guidance on financial matters related to Islamic law.

Why are alcohol and some food products haram?

In Islam, alcohol and certain foods are considered forbidden or “haram” due to their potential harm to the body, mind, and soul. Alcohol is believed to cloud the mind, impair judgment, and lead to immoral behaviour, while pork is considered unclean and unhealthy. Halal slaughter guidelines ensure that animals are treated and prepared properly.

The dietary restrictions in Islam aim to promote physical and spiritual well-being, encouraging Muslims to lead a healthy and balanced lifestyle. These restrictions are based on the teachings of the Qur’an and the Sunnah (prophet Muhammad’s example), emphasising the importance of consuming only what is good for the body and avoiding anything that may be harmful.

Permissable Loyalty Programs:

  1. Halal restaurants: Such restaurants may offer loyalty rewards for frequent customers or for reaching certain spend thresholds with the restaurant.
  2. Halal grocery stores: Strictly halal stores may also offer loyalty programs for customers who frequently purchase halal products.
  3. Islamic banks: Banks that have been founded on Islamic principles may offer loyalty programs to their customers, which may include discounts on certain services or benefits for maintaining a certain account balance.

Non-permissible Loyalty Programs:

  1. Wine and Liquor Store: A wine and liquor store offers a loyalty program to its customers where they can earn points for every purchase. The points can be redeemed for free bottles of wine or liquor. Since the rewards are based on prohibited products like alcohol and the activities involved are haram, this loyalty program would be considered non-permissible for Muslims.
  2. Credit Card Company: A credit card company offers a loyalty program to its customers where they can earn points for every dollar they spend. The points can be redeemed for travel, merchandise, or cashback rewards. However, since the rewards are based on interest and the activities involved are haram, this loyalty program would be considered non-permissible for Muslims.

When in doubt about halal/haram, ask

It’s important to note that not all loyalty programs are created equal, and Muslims should always examine the nature of the rewards and the activities involved before participating in any loyalty program. If the rewards involve prohibited activities like interest or the consumption of haram products like alcohol, then participating in the program would be considered haram for Muslims.

In conclusion, largely the view on the interpretation of halal permissibility of loyalty programs in Islam depends on the nature of the rewards offered and the activities involved.

As long as the rewards are based on permissible activities and can be redeemed in line with Islamic principles then the program should pose no threat to a halal way of life.

When in doubt about the islamic permissibility of a program, ask your local Sheikh or seek out an islamic scholar.

<a href="" target="_self">Georgette Mikhael</a>

Georgette Mikhael

Georgette Mikhael is a Senior Strategy Consultant at Loyalty & Reward Co, the leading loyalty consultancy. Loyalty & Reward Co design the world’s best loyalty programs for the world’s best brands. She has worked in the loyalty and member benefits space for over ten years with brands across the financial services, legal, travel, retail, automotive, hospitality, philanthropy and technology industries with brands such as Mastercard and the Westpac Group. Georgette has particular interest and expertise in commercial sales, strategic partnerships, business development and customer engagement successfully conceptualising, implementing and overseeing innovative strategies & campaigns for account and business growth.

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