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Pawn shops use Internet to fight cash-card threat

A consortium of pawn shops is banking on the development of an e-commerce platform to balance the sector's losses resulting from the booming cash-advance card business, a pawn shop owner said over the weekend in Taipei.

"In order to compensate for the great losses the industry has seen following the popularity of cash-advance cards, we decided to develop the e-commerce mechanism as a channel for auctioning pawned goods that are not redeemed by customers," said Chin Si-lin (秦嗣林), chairman of Taipei City Pawn Association (台北市當鋪公會).

Taiwanese started turning to cash advances as a method of weathering difficult economic times when Cosmos Bank Taiwan (萬泰銀行) first introduced its `George & Mary' card in 1999.

The cash-advance cards allow cardholders to withdraw small amounts of money from ATMs for commission fees of about 3.5 percent and annual interest up to 18.25 percent, without providing collateral or guarantees, nor paying application fees or annual fees when applying for the card.

As of August, around 3.8 million cash-advance cards were in circulation nationwide, with total outstanding loans amounting to NT$145.2 billion, the Bureau of Monetary Affairs under the Ministry of Finance said last month.

That figure compared to some 3.3 million cash-advance cards in circulation as of June, with total outstanding loans of NT$127.7 billion, the bureau said.

Ever since then, the nation's pawn shop sector has seen business drop around 40 percent annually, which translated into a total loss of around NT$4 billion, according to Wang Chih-chiang (王志強), chairman of Hsinchu County Pawn Industry Association (新竹縣當鋪公會).

"Our business was affected when banks started offering the cash-advance service to credit card holders around eight years ago," Wang recalled. "The business has deteriorated since the cash-advance card business boomed more and more over the past two years."

Some 60 out of 2,000 pawn shops in Taiwan have suspended their business over the past two years due to business slump, Wang added.

So far, 274 pawn shop owners in Taipei have agreed to jointly offer an online sales service Web site (www.pawn.org.tw) for the secondhand items, mostly jewelery and automobiles, which they have bought at a discount of the original price, Chin said.

"We offer quality commodities with guarantees for customers. We currently have up to 10,000 articles worth NT$100 million available for sale online," Chin said.

The number of pawned items available for online sale is expected to increase to 50,000 in the next two years, he added.

But organizers of the nation's first pawn shop Web site want to achieve more.

They said they hope the establishment of such an online channel will help consumers understand more about the pawn sector.

"Over the Net, we provide customers with an online-goods evaluation service as a reference for used-goods market prices," Chin said.

"We will appeal for the concept of used-goods recycling to expand customers' sources and attract people to pawn their unwanted articles," Chin said.

Maureen Wu (吳曉嵐), associate public relations manager at Yahoo-Kimo Inc, Taiwan's largest Internet portal, was not willing to comment on the new pawn shop Web site.

Yahoo-Kimo's online auction Web site provides more than 3 million pieces of goods with an annual auction turnover of up to NT$1.2 billion.

But she did point out the importance of personal identification of the vendors at its Web site to protect the buyer from fraudulent transactions.

"We conduct a verification process to check the authenticity of vendors' e-mail addresses and mobile phone numbers to make sure they can indeed be contacted by the buyer," Wu said.

"If the ads posted by vendors look unreasonable, like a luxury-brand bag for sale at NT$3,000, we withdraw the ads and block the vendors from conducting auctions on our Web sites," Wu said.

In response, the pawn association said its commodities for online sale came from its member stores, assuring customers that they won't encounter any fraud or buy any fakes or spoils through its Web site.
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