Can I charge a fee for late payment?

Question

As Salaamu Alaikum,

I work for a corporate company and have been asked to implement a system to charge late a payment fee on overdue customer accounts. I am of the opinion that this is the same as charging interest as the customer in essense will be paying a higher amount for their product than what was initially agreed. Please advise if my understanding is correct as I do not want to taint my income with any Haraam money. If I am forced to do this then please advise on what should be done to cleanse my income.

Jazak'Allah.

Mawlana Ali bin Cassim · Accepted Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Your understanding of this issue is correct. To charge late fees for a due payment is not permissible as it is tantamount to Riba (interest). We suggest you speak to your employer about giving you another duty not connected to such an impermissible task.

If your job normally requires you to carry out such tasks then you should consider another employment. Inshallah finding an employment free of such duties will also bring barakah in your wealth.

And Allah Ta’āla Knows Best

Mawlana Ali bin Cassim,
Student Darul Iftaa
Los Angeles, U.S.A

Checked and Approved by,
Mufti Ebrahim Desai.

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