Islamic finance embraces fintech with gold-backed debit card

Islamic finance embraces fintech with gold-backed debit card

Islamic Fintech Wahed's first bank branch on Baker Street in London.  Photo: Wahed

Islamic Fintech Wahed’s first bank branch on Baker Street in London. Photo: Wahed

Wahed, a New York-based Islamic fintech backed by Saudi oil giant Aramco ( 2222.SR ), has launched a gold-backed debit card that is Sharia-compliant and avoids customer money remaining inside the traditional banking system, where it would be exposed to interest.

It unveiled the card at the opening of its London branch in Baker Street, its first in the UK.

The new card stores customers’ money in gold (GC=F), so they can spend and save without risking exposure to lending. Investors will also be able to redeem the gold in their accounts for physical bars.

Wahed, also a “halal” stock trading platform, said it is catering to an unmet demand.

Founder Junaid Wahedna said: “The gold-backed debit card addresses a major problem facing many Muslims, particularly in the UK, who have traditionally stored their money in cash.

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“This practice has contributed to a cycle of poverty and made them vulnerable to fraud.

“Our debit card uses an exchange-traded commodity on the London Stock Exchange (LSEG.L) to store customers’ assets in gold, ensuring their money is safe, helping them grow, and allowing them to spend and store money without risking exposure to Riba.”

Riba is an Arabic word that refers to different exchange or fees and charges for loans.

Under Islamic law, interest is considered riba, or an unjust, exploitative gain, and as such is prohibited.

Wahedna added: “It is also safer to use gold against the current weakening of fiat currencies, which particularly affects those who keep their savings in cash as they are hit hardest by inflation.”

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“We are confident that this product will provide significant benefits to our customers and help improve their financial well-being.”

Wahed, which targets clients looking for Sharia-compliant investments, is backed by UFC (Ultimate Fighting Championship) star Khabib Nurmagomedov.

TURIN, ITALY - JANUARY 10: Paul Pogba of Juventus during a training session at JTC on January 10, 2023 in Turin, Italy.  (Photo by Daniele Badolato - Juventus FC/Juventus FC via Getty Images)

Other investors include international footballer Paul Pogba. Photo: Daniele Badolato/Juventus FC via Getty

“The launch of Wahed’s new London branch and debit card makes it more accessible to everyone,” said Nurmagomedov, who is also Wahed’s brand ambassador. He is one of the high-profile backers who helped the company raise over $75m (£60m) in funding.

Other investors include international footballer Paul Pogba, “strategic family offices” and institutions such as the Saudi Aramco Entrepreneurship Center (Wa’ed).

Wahed’s Shariah-compliant ETF is listed on NASDAQ (^IXIC) as the Wahed FTSE USA Shariah ETF (HLAL).

It also has an ETF listed on the Dow Jones (^DJI), called the Wahed Dow Jones Islamic World ETF (UMMA).

Its mission is to change how the Muslim community participates in global financial markets by making investments accessible and ethically compatible for the 1.8 billion Muslims globally.

For many Muslims, investing in line with their faith is made more complex by the exclusion of companies that derive profits from interest.

Most major banks including HSBC ( HSBA.L ) and investment platforms such as Robinhood ( HOOD ) also offer Sharia-compliant products. HSBC is the only high street bank to offer an Islamic mortgage service.

According to The Dollar Bureau, Wahed’s two ETFs are the most profitable Sharia-compliant funds. The EFTs on the NASDAQ and Dow Jones enter the number one and two most profitable funds, respectively.

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There are alternative Shariah-compliant EFTs, including Wealthsimple Shariah World Equity Index ETF (WSHR.NE), S&P500 (^GSPC) Shariah Industry Exclusions ETF and SP Funds S&P Global REIT Shariah ETF (SPRE).

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