Specialist Pawn Shops

It’s been well-popularized that Filipinos have an uncanny quality of hospitality built into them. The other side of this is a social culture that pressures for mandatory celebration regardless of economic conditions. A Filipino is simply expected to throw a party for all sorts of occassions, which include all Christian holidays, national holidays, greeting card holidays, graduations and birthdays. This compels the average Filipino to frequently sink into debt in order to maintain the festivities. This debt is compounded by the fact that traditionally, only one member of the family is expected to make income for the entire lot. That is why in this country, pawn shop franchises sprout up at a much greater rate  than Startbucks.

When savings go negative, the most common collateral available is the cell phone. Text messaging is pervasive because fixed line phone plans are unaffordable for the majority. Mobile operators also provide cheap entertainment alternatives in cell phone format such as ringtone subscriptions, contests, celebrity gossip, interactive games and serialized short stories. Specialist "cellular pawn shops" are now taking advantage.

Pawn shops run by techies who are trained to appraise all cell phone models are proving lucrative. If the customer who turns in a cell phone repays, the average absolute return from the interest per transaction is 16%. The average profit margin from a resold cell phone is 37.5%.