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I have a loyalty card at the local grocery store. Fairly typical, really, one of those "for every dollar you spend, you get X points added to your card" that most if not all grocery stores (at least around these parts) carry.

Over the years, I have accrued many thousands of points. While these points can be redeemed for FABLUOUS PRIZES, they can also be exchanged (and in a much more cost-effective manner, I might add) for a straight cash reduction to a future grocery bill. The exact cash value of each point is easily calculated, but varies depending on how many are used in the transaction; points are more valuable for larger transactions than they are for smaller ones.

As these points do thus have a form of direct (albeit limited) cash value, are they subject to zakat? And if so, how should it be calculated?

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The methodology to determine financial aspects of any given transaction is to look at the actual transaction -- what's changing hands, and when, and why -- and from that, we can understand what exactly is happening, and how to relate that to the actual fiqh rulings (such as zakah).

For groceries, the transaction is quite simple. You, the buyer, are purchasing some groceries at some price. The seller agrees to sell you these groceries now, in exchange for immediate payment (cash/debit) or deferred payment (credit card). It's a simple, "vanilla" buying and selling transaction.

The points, then, are not part of the actual transaction. If you didn't have the loyalty card, paid for your groceries, and walked away, we would say that you completed the transaction. There's nothing else here.

So what about the points? In this case, they are considered a gift from the shari'ah's perspective. They're not actually part of the transaction; they're a gift from the seller to the buyer. This applies to similar situations, such as credit-card points (which are a gift from the credit-card company to the card wielder).

What's more, these points are not zakatable. Rasulullah (the Apostle of Allah) said:

Gold for gold, silver for silver, wheat for wheat, ...

Based on this hadith, scholars have postulated that zakah only applies on cash and currency. (This includes digital cash -- what's in your bank account.) In this case, points wouldn't be considered currency (money, gold, or silver); they would be considered, well, points. So they would not be zakatable.

To explain this hadith a bit further: scholars mention that rasulullah only mentioned two things: gold and silver. Some scholars (a minority) note that both these things are metal, and by extension, postulate that zakah should be paid on all metals -- including iron, steel, copper, etc.

This opinion is a minority. The majority of the ulama say that this hadith means only gold and silver, because they were the currency of the day. Based on this, any currency is zakatable, including USD, CAD, GBP, et. all.

And Allah knows best. If you want to play it safe, you can always cash out your points on your hawl date and pay zakah on your savings. 2.5% really is very little, and you usually don't feel the pinch.

Source: Weekend class on Islamic Finance 101

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  • The "only applies on cash and currency" point should be clarified, as it doesn't follow logically from the quoted hadith (wheat, for example, is neither a cash nor a currency).
    – goldPseudo ♦
    Nov 7, 2012 at 20:42
  • wheat isn't a metal either, and as far as i know it was never used as currency. i just can't see how the conclusion posited derives from this hadith at all.
    – goldPseudo ♦
    Nov 8, 2012 at 2:20
  • The exact science of how and what you can derive from ahadith is very complicated; hence why I have quoted scholars. For suggested reading, I would recommend a course or two on usool-ul-fiqh, maybe some mustalah al-hadith too.
    – ashes999
    Nov 8, 2012 at 2:22
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According to Fiqh of Shia Islam it is not needed to pay Zakat for balance of point card but they can be subject to Khums if include in terms of Khums.

Zakat is of two types, Obligatory and recommended. Obligatory Zakat is again of two types. The Zakat of wealth and the Zakat of body (Fitra). The Zakat of wealth is for nine items: Four food grains (Wheat, barley, dates and dried grapes); Three quadrupeds, (Sheep or goats, cows and camels) and two types of coins, (gold and silver). Zakat of food grains becomes obligatory when wheat, barley, dates or resins reach a particular quantity (Nisab). The Nisab (taxable limit) is fixed at 40 mithqal less than 280 Tabrizi mounds approximately equal to 847 Kilograms. If the cultivation of wheat, barley, dates or resins was carried out by rain water, stream/river or from the moisture of the earth (like the lands of Egypt etc.) the Zakat payable is one-tenth of the total yield. But if it was cultivated with well-water etc. the Zakat is 1/20 (twentieth part / 5.

References:

http://www.islamic-laws.com/zakat.htm

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