System Architecture for E-auctions that Conforms to Sharia Principles

Abstract

Online auction or e-auction is one of the most successful forms of electronic commerce in which millions of products are sold daily via a dynamic price competition. Unlike customary trading methods, e-auctions are conducted in a virtual environment where participants are remotely contacted, no hand-to-hand delivery, and higher fraud and deceit risks are present. From Muslims’ perspectives the main question that arises pertaining to e-auctions is the extent of compatibility of this new form of auction with sharia principles. This concern is valid since studies revealed the presence of illegitimate sharia features in the conventional e-auction methodology and raised the demand to fully harmonize its system architecture so that it embodies the Islamic principles. In order to meet sharia requirements, this paper proposes identity verification to avoid anonymous identity, product verification in terms of ownership and permissibility, lawful payment methods, compatible auction and bid charging, and following rightful procedures. Implementing e-auction systems based on the proposed architecture can be considered sharia compatible. This allows and reassures Muslims to participate in e-auctions.