Pawnshops: Growing industry fueled by unemployment

by Marielle DSJ Chico

“Matagal na akong walang trabaho kasi hindi ko ma-process yung mga papeles ko.”

These are the words of Jane (not her real name), a customer of a local pawnshop called Network Gadget Phoneshop in Los Baños, Laguna.

Jane attempted to pawn off her cellular phone so she can have money to use in processing requirements for her job application. According to her, pawning off personal effects, such as jewelry and cellular phones, is the fastest and easiest way of getting money in times of need. She needs a relatively small amount of money, and this amount simply cannot be borrowed from banks.

A few minutes after entering the shop, Jane walked out empty handed. The pawnbroker rejected her phone, which was classified as an old unit.

Pawnshop industry in the Philippines

Jane is only one of the many Filipinos who turn to pawnshops for easy money.

In an interview with the, the Bangko Sentral ng Pilipinas (BSP) noted that there is a recorded 17,408 pawnshops in the country. Clearly, pawnshops outnumber banks, which are only 9,803 throughout the Philippines. The accessibility of pawnshops is one of the reasons why people choose to pawn their items in times of urgent need of money. It is also hassle-free as it only requires presenting and giving a clear copy of the pawner’s valid ID.

Another advantage that customers get is that they do not directly sell their item and can redeem it after paying their loan/s within the date stated on the contract. Also, as long as their offer is of great value, the pawners can be sure that their items will be accepted.

However, despite all the benefits given by pawnshops, there is still a social connotation that pawnshops are a haven for thieves because these establishments supposedly accept stolen items. In addition, pawnshops give both low appraisal and high interest rates to some valuable items, like jewelry and gadgets, since all of their customers are in urgent need of money and would be ready to take any amount. Thus, people see pawnshops as predators preying on people in need of financial assistance.

In recent data presented in March 2015 by, an online site that releases surveys regarding economic issues, unemployment rate in the country as of January 2015 is at 6.6 percent, which is up by 0.6 percent from the rate in October 2014, but 1.1 percent lower than the rate in January 2014. The unemployment rate is determined by the number of jobless people who are actively seeking jobs; people who are unemployed but not looking for jobs are excluded from the statistics.

One requirement in applying for jobs in the Philippines is an NBI clearance. In order to get one, a person must first secure a police clearance, a barangay clearance, and a local taxpayer’s certificate (cedula). Other requirements in job applications include Social Security System (SSS) card, medical certificate, and PhilHealth membership. Adding up the cost of these requirements, a job applicant must prepare at least Php 2,500 just to have documents ready for photocopying and attached to their resume or biodata. Other miscellaneous expenses, like transportation and food purchased during the process, are not yet included.

Unemployed individuals usually have families to feed. Because they do not have work, they have to look for other ways to support their families while looking for job opportunities. Some of them have children who go to school. Thus, aside from the tuition fee, they have to provide school supplies, uniforms, and other “musts,” such as allowance or snacks. The financial responsibility does not end here as they also have to provide for the whole family: food, shelter, and the bills. Even during unemployment, many individuals are still breadwinners of their families.

How could someone who does not have any source of income pay for all of these?

By doing as Jane does — going to pawnshops.

Ensuring safety

In order to clear off this negative image and to help the industry grow, the BSP and the Department of Interior and Local Government (DILG) decided to take action to ensure that pawnshops are complying with laid down rules and regulations. The BSP launched a campaign entitled “Know-Your-Pawner”, also known as Memorandum No. M-2013-020 (started strict implementation last 2013), where pawnshops were asked to be stricter in accepting pawns, know with whom they are transacting by requiring customers to present a valid ID that indicates his/her residential address (the customer can also show the original and give a clear copy of certification of the barangay stating that he/she is living there or a billing statement with the person’s address), and if the stated cost of the item to be pawned off is true to its value and were not stolen.

The pawner could present any of the following identification cards: passport, driver’s license, Professional Regulation Commission (PRC) ID, National Bureau of Investigation (NBI) clearance, police clearance postal ID, voter’s ID, barangay certification, Government Service Insurance System (GSIS) e- Card, Social Security System (SSS) Card, senior citizen card, Overseas Workers Welfare Administration (OWWA) ID, OFW ID, seaman’s book, Alien Certification of Registration/Immigrant Certificate of Registration, government office and GOCC ID, certification from the National Council for the Welfare of Disabled Persons (NCWDP), DSWD certification, Integrated Bar of the Philippines (IBP) ID, and company IDs.

The BSP also warned the public about unregistered pawnshops and told them to check first if the pawnshop was registered in BSP before making any transactions. One way to be sure if the pawnshop was registered was by checking the list of pawnshops on the website of BSP. Registered pawnshops also have a sticker from BSP proving that they were given permission to operate. They also reminded the public to read first the contract before signing it to avoid future problems, especially when the customer wishes to redeem his/her pawned valuables.

Conflicts faced by pawnshops

Network Gadget Phoneshop, a local pawnshop, scheduled a big sale for 2015 because, according to management, the establishment needs to dispose off so many unclaimed items. Staffers of the pawnshop display a wide variety of gadgets for sale at very affordable prices.

It is an everyday sale day for the people who are looking for branded yet cheap gadgets.

Network Gadget Phoneshop displays gadgets that were not redeemed by pawners. These gadgets are up for sale. Photo by MDSJ Chico

The large number of unredeemed pawned off items prompted the Network Gadget Phoneshop to start 2015 with their glass cabinet displays full of gadgets ranging from cellular phones, tablets, laptops, handheld gaming consoles, and different kinds of cameras. The displays have since been attracting customers. The items were quickly disposed off, and as of April, only high-value items remain, such as iPhones and iPads.

In an interview, Angel (not her real name), an employee of Network Gadget Phoneshop, said that more items are being auctioned off than redeemed, that is why they need to be selective of the items accepted for pawning. There is no guarantee that the old-model cellular phone owned by Jane will be sold if ever she failed to pay her loan.

Angel also said that one of the drawbacks for the pawnshops is when their customers failed or decided not to redeem their pawned item anymore. For the pawnshops, there is no assurance that the item will be sold once it was put on a sale. Since these items are secondhand, they would also have to sell them at a lower price because truth be told, no one would buy a secondhand if they can have a brand new one at the same price even though they are different items.

“Yung matagal na masyado sa amin yung item, for auction na [pero] may naghahabol pa. Sakaling naibenta na nagrereklamo po sila,” she said when asked about the other problems that they experience with their clients. All they can do during these moments is show that contract that their customers have signed and tell them that it is final and irrevocable.

Pawnshops—the best band-aid solution for unemployed people

The solution that the government can do regarding the growing pawnshop industry in the country is to provide support to the people in the industry even to the simplest thing. The “Know-Your-Pawner” policy and checking if the pawnshop ID BSP was BSP registered will give security to the pawnshops and the customers, and at least through that, they can lessen the problems faced by the people in need of money.

This may not be the solution to the problem of everyone like Jane, but through the effort of remedying the problems of the marginalized sector in the country and supporting the pawnshop industry in the Philippines, this might serve as a first-aid to those who make sacrifices just to provide for their families.

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