In order to comprehend thoroughly what is Riba, it is essential to understand the following terminology.

Darul Islam: A Muslim state which is under the rule of Muslims.
Darul Harb: A non-Muslim state which is not under the rule of Muslims.
Muslim Asli: A Muslim native of a Muslim state (who pays Zakat).
Zimmi: A non-Muslim of a Muslim state (who pays tax).
Harbi: A native of a non-Muslim state whether a Muslim or non-Muslim. Such a Muslim is called Muslim Harbi.

The legitimacy of the trading and the illegitimacy of usury is proved from this Quranic verse:

وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا
سوره البقرة:2 , آيت:275 , جزء من الآية

Whereas Allah has made trade lawful and has made interest unlawful.
Chapter 2, Al-Baqarah, part of Verse:275

It is not hidden from the men of wisdom that the Bay’(a trading or selling contract) is of various kinds like Bay’a Faasid, Bay’a Baatil, Bay’a Makrooh, Bay’a Sahih, etc. meaning Invalid trading contract, Valid trading contract, Void trading contract, Prohibited trading, etc.. Under “Ahallallahu Al Bay’a” no one can say that the void contracts or invalid contracts are lawful.

It means that every sale or contract is not valid unless it meets the Shariah rules. Similarly, not every increase or decrease will be called Riba unless its causes and effects are considered.

Illat:
(Root Cause: Basic logical or rational reason of legitimacy or illegitimacy of any ruling, original cause to the effects)

It is to be made clear that the Shariah laws are subjected to Illat. The laws will change if the illat is changed. Riba is prohibited in the Quran and Sunnah but the Illat or reasoning of the illegitimacy is not described. Therefore, the Jurists derived their conclusion about the Illat of the Riba from this known Hadith.
Narrated Ibn ‘Omar (Sahi Bukhari) : The Prophet (ﷺ) said :
“The selling of wheat for wheat is Riba (usury) except if it is handed from hand to hand and equal in amount.”

Similarly the selling of barley for barley, is Riba except if it is from hand to hand and equal in amount, and dates for dates is usury except if it is from hand to hand and equal in amount.
(Al hintatatu bil hintati wasshaeer ……beyad wal fadl riba)

Abu Hanifa (رحمة الله عليه) regards the species and the quantity as the Illat. It means if a commodity is sold or exchanged against an increased or decreased quantity of the same species, this is Riba. Particularly, a credit sale will be absolute Riba if it carries an increase or decrease in the quantity against the same species. Such Riba is called ‘Riba An Nisia’. This, as Abu Hanifa (رحمة الله عليه) says, is absolutely illegitimate.

Imam Shafa’ee (رحمة الله عليه) says that the Illat in the eatables is the edibility, and the pricing value in the bright metals. Therefore, he regards one kilo of rice for one or two kilos of apples as Riba whilst one kilo of copper or brass or cement for two kilos is permissible. It is permissible whether it is Darul Islam or Darul Harb as these commodities do not pertain to the bright metals or to the eatables.

For Imam Abu Hanifa (رحمة الله عليه) there is an element of Riba in all such goods which can be measured or weighed. It means the goods that are sold by means of measurement and weight are subject to the Shariah limits. As such there is no element of Riba in less than half Sa’a (1.25kg). Taking back two apples against one or two handful of rice against one is legitimate with Abu Hanfia but it is not legitimate, according to him, if it is 1 kg of iron against 2 kg.

It is evident from the above description that the Imam Abu Hanifa (رحمة الله عليه) has enlarged the orbit of the Riba application but limited it to the territory and the people. On the other hand, Imam Shafa’ee limited the orbit of the Riba but generalised it i.e. applicable to everyone, everywhere equally.