Are Pay-as-You-Go Services Permissible?

Answered by Shaykh Irshaad Sedick

Question 

Is it allowed to offer or buy a pay-as-you-go service? For example, we agree on a price per unit (an hour or L or kWh or SMS message or actions or GB, etc.), then at the end of each month, the provider will send a bill to the user, which will be the price per unit times units used.

Sometimes the deal also includes an agreed-upon fee or is capped (e.g., pay $1 per unit, if you exceed 100 units, you only pay $100).

Doesn’t there need to be an express agreement of work to be done, cost, and period for the contract to be valid? How is this not ignorance (jahala) of the cost and job?

Answer

In the Name of Allah, the Most Merciful and Compassionate. May Allah alleviate our difficulties and guide us to that which is pleasing to Him.

The type of transaction is valid according to the conditions of sales transactions. There is an express agreement since the two parties agree on a price per unit. Each unit, and its price, is known to both the buyer and seller. Should the seller decide to gift some units to the buyer after a certain number of sales, the ‘free’ units are considered gifts, and Allah knows best.

 The Conditions of a Valid Sale

“Allah has made sale lawful…” [Quran, 2:275]

The more reliable of the two positions reported from our Imam, Muhammad Ibn Idris Al-Shafi’i (Allah Most High be well pleased with him), is that this verse is general. The permissibility is made more exclusive by other evidence. The Prophet (Allah bless him and give him peace) forbade various sales but did not explain the permissible ones; his not doing so proves that the initial presumption for the validity of a sale is permissibility. This is also espoused by hadiths such as the one in which the Prophet (Allah bless him and give him peace) was asked what earning was best, and he answered, “The work of a man’s hand, and every pious sale.” [Hakim, Al-Mustadrak]

Pious sales are free of cheating and deceit.

Lexically, ‘sale’ means to transact something for something else. In Sacred Law, it means to exchange an article of property for other property in a particular way. Its integrals are six:

(a) the seller;
(b) the buyer;
(c) the price;
(d) the article purchased;
(e) the spoken offer;
(f) and the spoken acceptance. [Keller, ʿUmdat al-Salik]

The Articles or Services Exchanged

Five conditions must exist in any article transacted. It must:

(a) be pure (O: in itself, or if affected with filth, it must be capable of being purified by washing);

(b) be useful;

(c) be deliverable (by the seller to the buyer, meaning that the buyer can take possession of it);

(d) be the property of the seller or the person whom the seller has been authorized to represent;

(e) and be determinately known (ma‘lum) (to the buyer and seller, as to which particular thing it is, how much it is, and what kind it is, to protect against chance or risk (gharar), because of the hadith related by Muslim that the Prophet (Allah bless him and give him peace) forbade the transaction of whatever involves chance or risk). [Nawawi, Minhaj al-Talibin]

I pray this is of benefit and that Allah guides us all.

[Shaykh] Irshaad Sedick
Checked and Approved by Shaykh Faraz Rabbani