The Middle Path for Umrah Escrow Accounts

In the medical world, there is a simple principle: a good medicine is not only capable of killing the disease, but also does not kill the patient. This principle seems worth applying when discussing the idea of using escrow accounts in the umrah industry. The goal is very noble: to protect pilgrims’ funds so they no longer fall victim to fraud.

However, as soon as the idea was publicised, some Umrah Travel Organisers (PPIU) reacted strongly. WhatsApp groups of industry players suddenly became lively. Some were supportive. Not a few rejected it. Some even felt that all PPIU were being branded as ‘bandits’ simply because of the actions of a handful of rogue operators.

The debate began with a step that actually deserves appreciation. On the sidelines of the International Islamic Expo 2026 in Jakarta, three PPIU — Kias Travel, Arfa Tours, and Rahmah Travel — signed a cooperation agreement with Bank Syariah Indonesia (BSI) to implement an Escrow Account.

Through this holding account, which places the bank as a third-party manager of the pilgrims’ funds, the money deposited by prospective pilgrims cannot be used directly by the travel bureau. Instead, it is only disbursed according to the fulfilment of agreed-upon stages or services. This is a step in the effort to strengthen the protection of pilgrims’ funds from umrah fraud. Yet, this is where the discussion becomes interesting, because the issue is not simply a matter of agreeing or disagreeing with escrow. What is at stake is how to protect pilgrims without killing the industry that has been serving millions of the guests of Allah.

Indonesia indeed has a long history of wounds in umrah operations. First Travel is the biggest symbol. More than 63,000 prospective pilgrims failed to depart, with losses reaching around Rp 900 billion. This year, the public was shocked again by the Hanania Travel case, which caused 2,500 pilgrims to fail to depart with suspected losses of around Rp 100 billion. These two umrah fraud incidents are enough to say that the system indeed needs reform. But is the answer simply an escrow account?

For the general public, escrow sounds very logical. Pilgrims’ funds are held by the bank first. The travel agent only receives payment after all services are completed. In theory, it is almost impossible for a travel bureau to run away with the pilgrims’ money. The problem arises when theory meets business reality. In practice, travel bureaus must pay various components long before departure. Plane tickets must be purchased in advance. Hotels must be paid for upfront. Visas, catering, transportation, ground handling, and various other operational costs all require cash from the start. If all pilgrims’ funds are still held in the escrow account until the pilgrims return home, how are these operational costs to be covered?

This is where a term repeatedly mentioned by business players emerges: cash flow. Cash flow is the blood in a company’s body. A company can have large assets and high profits, but still collapse if its cash flow is blocked. Even world-class companies can go bankrupt not because of losses, but because they run out of liquidity. This is why some PPIU are worried if escrow is rigidly mandated. They fear that only companies with very large capital will be able to survive, while small travel bureaus that have been healthy and compliant will struggle to obtain working capital.

This concern should not be seen as defending rogue players. Indeed, this is where the maturity of policy-making lies. Good regulation must not be born solely out of anger over a single case. In public policy science, there is a term known as regulatory impact assessment, measuring the impact of a rule on all stakeholders. If all houses are fitted with iron bars because there is a thief, we might indeed be safer. But we must not let the house itself turn into a prison for its inhabitants.