The iFreedom Plus MasterCard is tailored to meet the religious requirements of Canada’s Islamic community and was recently launched by Toronto company UM Financial. The card meets the requirements of Shariah law, which prohibits usury, by being prepaid and therefore interest free. About 100 people are testing the card, which can hold up to $6,000 and 10,000 will be made available to the general public this month. Activating the card for two years costs $50. Benefits include no monthly fee, no transaction fees, one per cent cash back on purchases of more than $100, and discounts on flights with Etihad Airways.
UM Financial launched a Shariah compliant mortgage in 2005 through a funding partnership with the Credit Union Central of Ontario. The project started in 2005 and ran until 2007, with a funding line of $120 million.
At least one major Canadian bank has attempted to offer Sharia complaint products. RBC tried unsuccessfully to launch a Shariah-compliant equity-linked note investment product a few years ago. Walid Hejazi, an associate professor of international business with the Joseph L. Rotman School of Management at the University of Toronto, said there is confusion about Islamic finance. The products are “just a financial instrument with a different set of characteristics,” said Hejazi. There is a huge demand for compliant mortgage products, he said.