New startup lets Indonesians pawn goods for cash when times are tough

Pinjam claims to be Indonesia’s first-ever online pawn shop. Its site went online just last month.

The startup co-founded by Teguh Ariwibowo and Romeo Reijman plans to shake up the traditional pawn shop industry in Indonesia. On Pinjam, people who find themselves in a financial tight spot can get a valuation for an asset, such as a motorcycle, around the clock. If they agree to the terms, they can have that item picked up by Pinjam and receive cash in return. There’s no need to visit a branch office.

At present, Pinjam takes only electronic items and motored vehicles, and only operates in the greater Jakarta area.

An alternative way to quick cash

Since going online last month, the site already has attracted almost 2,000 registrations, including pre-registrations, and serves one to three customers per day, says Ariwibowo. In a couple of weeks, Pinjam plans to add gold and jewellery to the list of accepted items.

A customer is charged a fee for each exchange depending on the size of the loan, and will also pay a weekly fee of 0.7 percent on each loan.

Ariwibowo says that based on his research, the existing market of this industry in Indonesia is estimated to be worth at least IDR 100 trillion (US$10 million).

He believes that the high number of Indonesians who still don’t have a bank account or access to bank loans and credit cards are what drives the pawn industry.

As first mover in taking pawn services online in Indonesia, Pinjam competes with traditional pawn shop operators. In contrast to traditional shops, Pinjam uses technology to make the item valuation process transparent. Also, all items stored on behalf of the customer are fully insured until their return.

Precedent in the Philippines

In February, a startup called PawnHero launched in the Philippines, claiming to be the first online pawn shop in Southeast Asia. PawnHero was able to nab angel funding from Nix Nolledo, the Filipino tech billionaire who co-founded Xurpas and later got logistics provider 2GO on board as partner for drop off and pick up of pawned items.

“All 2GO branches turned into pawnshops… Suddenly, they [PawnHero] have nearly as many branches as the number one player. Getting the right partner gives you a strong competitive advantage. If you find the right investor or partner, you will scale much faster,” he told Tech in Asia during an interview in March.

(Update May 21, 2015: The above paragraph was edited to reflect the fact that Nix Nolledo had invested in PawnHero before the startup partnered with 2GO, not after.)