Pioneer online pawnshop PawnHero comes to the rescue of Filipinos with cash needs

In the Philippines, only two out of 10 Filipinos have bank accounts and less than five percent have credit cards. Most don’t have access to affordable credit. As such, many fall prey to loan sharks or turn to pawnshops, which charge extremely high interest rates.

Launching this week, PawnHero – Southeast Asia’s first online pawnshop – seeks to solve the problem of expensive credit for base-of-the-pyramid consumers in emerging markets.

“We provide an easy, fair, and convenient way of overcoming short­-term cash needs. This is a completely new way of doing business in the industry,” says its chairman and co-founder David Margendorff.

Better than traditional pawnshops

Unlike brick-and-mortar pawnshops in the Philippines, which usually only accept jewelry, PawnHero also accepts gadgets, electronics, and luxury handbags.

All you need to do is take a picture of the valuable you wish to pawn and in minutes, you’ll receive an estimate for your item. You may choose to have your item picked up by PawnHero’s logistics partner 2GO or drop it off at any of the over 900 affiliated 2GO outlets nationwide. The whole process isn’t only convenient, it also breaks the stigma around pawnshops as it eliminates the need to line up at physical outlets, which can be embarrassing and intimidating for some.

“You need not have a bank account. We will provide you with a free PawnHero Card, a debit card you can use at any ATM nationwide, shop at any Bancnet-accredited merchant, or online store. Your money will be deposited to your account immediately after we have received and appraised your item. Packages are fully insured and shipping is on us,” explains Margendorff.

“When it’s time to redeem your item, you may simply contact one of our customer representatives or use your PawnHero Card to pay for your loan and the company will ship back the item to you, again fully insured and free of shipping charges,” he adds.

PawnHero goes all out to give traditional pawnshops a run for their money. Because of the use of technology, it is able to offer half of the monthly interest physical pawnshops offer, according to Margendorff. Even better, he says, “there are no hidden costs and no penalties for late payments.”

Margendorff says consumers may also sell their valuables to the platform and eventually, the platform will launch an ecommerce feature to sell unclaimed loaned items at affordable prices. “It’s a more convenient solution than eBay or OLX since you wouldn’t need to research the price for your item or create an ad or wait for a potential buyer. We’ll take care of everything, even shipments,” boasts Margendorff.

Value for consumers

PawnHero is the first such platform in Southeast Asia, but the concept itself is already proven in mature markets like the UK and US where online pawnshops iPawn.com, Pawngo.com, and Borro.com operate.

Emerging markets, particularly the Philippines, could be very profitable for online pawnshops, if they are successful in capturing the customers of traditional outlets. Traditional pawnshops in the Philippines have grown from around 4,000 in 1995 to over 17,500 today, compared to only 9,000 banks, according to Margendorff. The total estimated loan volume recorded by pawnshops has grown at a compound annual growth rate of 27 percent since 1995 to about US$1 billion in 2014. An estimated one million Filipinos visit pawnshops every day.