Kafalah means "guarantee" or "surety" in Islamic law. It is a contract where a third party (the guarantor) promises to fulfill the financial obligation of another person if that person fails to do so. Think of it as co-signing a loan.
For example, if you need a bank loan but lack sufficient collateral, a family member or business partner can provide Kafalah — guaranteeing the bank that they will pay if you default.
In Islamic banking, Kafalah is widely used in letters of credit, bank guarantees, and trade finance. The guarantor typically cannot charge a fee for the guarantee itself (as that could resemble interest), but they may charge for actual expenses incurred in providing the service.