Abstract

Zakat, one of the Five Pillars of Islam, is a form of almsgiving that requires Muslims to give a small percentage of their saved capital to charitable causes to the poor and needy. Zakat is commonly determined as a proportion of a Muslim’s total saved wealth, which includes cash savings, harvested crops, cattle, and other forms of saved capital. The actual proportion is commonly estimated to be 2.5%. Zakat is usually collected and disbursed by the government or a charitable organisation every year. However, traditional methods of collecting and distributing Zakat may be obstructed by inefficiency or possibly corruption. In addition, Amil (Zakat manager) encounters several obstacles when attempting to collect Zakat, including technical obstacles such as great distances to travel to muzakki, lack of time, transportation problems, and expensive and inefficient processing costs. This conceptual paper debates the use of digital technologies to mitigate the aforementioned challenges and enhance Zakat administration. By digitising the collection and distribution of Zakat, it is possible to increase transparency, reduce administrative expenses, and enhance the process’s efficacy, as argued in this paper. Furthermore, this study sheds light on a case study of a successful zakat digitalisation project in a Muslim-majority country and discusses the challenges and opportunities of implementing similar projects in other contexts. Additionally, the framework proposes various Fintech tools such as applications, e-wallets, and accessible websites that have motivated the Muzakki (Zakat payer) to pay Zakat persistently because such platforms have ensured information availability, accountability, and transparency about the authentic collection and distribution of Zakat funds to the Asnaf (Beneficiaries). The article concludes by highlighting the potential of digitalisation to enhance the effectiveness of Zakat as a means of addressing poverty and inequality in Muslim communities.

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