What is the Islamic ruling on dealing with traveler’s checks?

The questioner : We move on to another question that does not relate to the previous topic, O Shaykh. What is the Islamic ruling on dealing with traveler’s checks? A man, for example, gives money to a bank and they give him checks. He then goes to any foreign country or any Arab country and is able to withdraw this money as it is, just as he deposited it in a bank. He takes it out simply by means of checks, i.e., through the checks. What is the Islamic ruling on this, on dealing with checks?

The Shaykh : I want to understand this issue well so that I can give the correct answer, if Allah wills, regarding the Islamic ruling. I believe that all these banks were not established to serve individuals, whether Muslim or non-Muslim, but rather they were established in exchange for interest that the bank owners benefit from. So when you raise the issue as you mentioned, where the value he hands over to the bank is received by him in any other bank and in any other country, what did the bank benefit from this transaction?

The questioner : Well, of course, he may use the money he deposited without his knowledge, and this is the case in every bank, but...

The Shaykh : That is known.

The questioner: Yes.

The Shaykh : But what does the other bank benefit when you take from it what you deposited in the first bank?

The questioner : He just wants to preserve his money...

The Shaykh : I am not asking about the man; I asked about the other bank.

The questioner : Yes, there is no benefit, and Allah knows best.

The Shaykh : So then, if the transaction is like this, we hope that all banking transactions are of this kind, but I do not think that is the case. Therefore, I want to uncover the secret. The first bank was paid, for example, one thousand dinars. Fine. And the payer went to another country and recovered the one thousand dinars. What did the bank that received the one thousand dinars in the other country benefit? I fear there is something, either it was not raised in the question or it was not known by...The questioner .

The questioner : By Allah, the brother is clarifying it for you.

The Shaykh : Some of the brothers do not participate in the topic.

The questioner : Shaykh, they give you papers...

The Shaykh : I do not want the picture. The picture that the brother described, do you agree with it?

The questioner : I agree with it.

The Shaykh : Very good. So the question directed to him is directed to you. If you have an answer, we will benefit from it, if Allah wills. The bank in the other country that returned the amount deposited in the first bank, which is, for example, one thousand dinars, what did the bank benefit? And we know that a bank cannot give something without what they call interest, and the true Islamic name for it is riba (usury or interest). We do not find any of that here. So what is the secret in this transaction? I said that if it is as stated, then may all banking transactions be as stated. I hope for an answer if you have one.

The questioner : If there is interest, O Shaykh, there is interest... the duration of the money staying with them.

The Shaykh : No, my brother, may Allah guide you. That is in the first bank.

The questioner : If you please, O Shaykh.

The Shaykh : Be patient for a moment until our second brother speaks as clearly as the first one did. The question regarding the second bank is clear. Regarding the first bank, it is completely understood. The one who received the one thousand dinars, as our first brother said, used it and benefited from it. The second bank, here, let us see what you have.

The questioner : May Allah reward you with good. I do not know. I know young people who deal with this same transaction.

The Shaykh : May Allah guide you. Give me the answer to the question and that is all. I do not want introductions.

The questioner : There is no interest that the first bank benefits from, except that it has a client.

The Shaykh : The first bank.

The questioner : The other bank becomes its client.

The Shaykh : My brother, my question is about the other bank.

The questioner : What does the bank benefit when it pays you the same value?

The Shaykh : I am asking you. Tell me what it benefits.

The questioner : I... the question.

The Shaykh: Go ahead.

The questioner : It does not benefit except the money that comes from the other bank. Just as this first bank that you gave the money to, what does it benefit? It returns it to you... if you request it, it does not benefit anything, only a commission from clients, i.e., a client.

The Shaykh : Allow me a moment. When the first bank took the one thousand dinars, it put them in its vault and used them until the payer of the one thousand dinars returns from the distant country. It will take days, or at least hours, right? So the first bank benefited. What did the second bank benefit?

The questioner : ...

The Shaykh : Wait a moment.

The questioner : Only the commission, i.e., that it has a client. That is it.

The Shaykh : Who is the client?

The questioner : The second bank that he deals with, because they have a balance. They have a balance at the second bank. For example, this Islamic bank here in Jordan has a balance at the American bank that gives him the traveler’s checks. And he says to him, "We have clients at such-and-such bank in America." This bank in America has a balance. The Housing Bank has a balance there. It has a balance, and also at this bank, the Housing Bank has a balance there as well. So the only apparent benefit, at least, is the commission, that this is a client of this bank and this is a client of that bank. I mean, the two banks are clients of each other. That is what they benefit. Also, this money that they take, they use it. The same thing happens when the Housing Bank puts a balance in the bank in America; the bank in America uses it and takes interest on it.

The Shaykh : So now it is clear in your answer that this check cannot have its value recovered from any bank?

The questioner : No, except from the bank that is named.

The Shaykh : Is that so?

The questioner : No, no, no, O Shaykh, any bank.

The Shaykh : You reversed the issue.

The questioner : The bank that is named...

The Shaykh : Be patient, my brother. I am telling you that according to your explanation, it means that not every bank can deal with this check?

The questioner: Yes.

The Shaykh : Fine, am I objecting to you, or am I agreeing with you?

The questioner : I agree, definitely I agree with you.

The Shaykh : Okay, that is settled. But here there is an objection, or now we need to benefit from the topic. Please proceed.

The questioner : O Shaykh, these traveler’s checks are really confusing.

The Shaykh : Confusing.

The questioner : But the matter, it seems to me now, is that the traveler’s check company is, of course, several companies, but this company, for example, has branches in all countries of the world. So he goes to this branch and withdraws the money as it is. So the benefit returns to the same company, just as it is. I mean, the benefit in Saudi Arabia is the same as the benefit that the bank used, for example, the bank in Oman used it as well.

The Shaykh : But this returns to what the brother said, and I do not see a difference between what you wanted to show, which is that the matter is not as he said. What is the difference?