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Fatwa CenterRuling on using the Paypal system
Question
Assalaamu alaykum. I have seen a question on Islamweb about paypal and their user agreement: fatwa No : 210412. You said that it constitutes interest, so is paypal haram? And if I use paypal to pay, considering that my money is on the debit card and not in paypal, is it haram then also? And given that I intend to work with websites and that they would pay me via paypal, would that be haram then also?
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad 
is His slave and Messenger.
We have already mentioned in several fataawa that there is nothing wrong in dealing with the site that you mentioned in order to transfer funds and do other permissible transactions that abide by Islamic conditions.
The fact that the site is involved in forbidden dealings – such as benefiting from the amounts deposited and transferred through it in usurious dealings – does not make it forbidden to deal with it in what is permissible, especially when in need. Dealing with someone who deals with riba (interest and/or usury) in what is permissible is something permissible.
The fatwa of Dar al-Iftaa’ in Jordan reads:
“It appears after searching “PayPal” site that it is a developed website that contains systems for payment, withdrawals and electronic transfer, and it is a traditional (Riba-based) bank site, but there is nothing wrong in fundraising through it for a legitimate purpose, as there is no Islamic prohibition in dealing with someone who deals with Riba in non-Riba transactions, provided that the transaction is free from other Islamic prohibitions, and it is not helping him in what is forbidden.
Also, the completion of al-Majmoo’ reads: “It is permissible to deal with someone whose money is a mixture of lawful and ill-gotten if none of them is clearly identified, because the Prophet dealt with the Jews, and it is known that they consider the price of wine to be permissible and they dealt with Riba." However, it is better for a Muslim in order to be on the safe side to avoid such dealing.
There is also nothing wrong for the fundraiser to transfer the amount of donations through the site itself, if the site takes a known (fixed) amount in return for the transfer service.” [End of quote]
Allaah Knows best.
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