The word riba as a noun literally means in Arabic, an increase, and as a root, it means the process .of increasing. Riba has been understood throughout Muslim history as being equivalent to interest paid on a loan.

Shari'ah scholars have used the term riba in three senses; one basic and two subsidiaries. In its basic meaning riba can be defined as "anything (big or small), pecuniary or non-pecuniary, in excess of the principal in a loan that must be paid by the borrower to the lender along with the principal as a condition,' (stipulated or by custom), of the loan or for an extension in its maturity." This is called riba al-qard or riba al-nasa. It is also referred to as riba al-Qur'an as this is the kind of riba which is clearly mentioned in the Qur'an and is known today as interest on loans.

However, the term riba has a more comprehensive implication and is not merely restricted to loans. Even though Islam has allowed the sale of goods and services, riba may surreptitiously even enter into sales transactions. Hence the two subsidiary meanings of riba relate to such transactions and fall into the category of riba al-buyu' (riba on sales). The first of these is riba al-nasi'ah, which stands for the increase in lieu of delay or postponement of payment. The second is riba al fadl, which relates to the purchase and sale of commodities. In this context, riba al-fadl refers to the excess taken by one of the trading parties