![Pawnbroker Oulu 20090906](https://upload.wikimedia.org/wikipedia/commons/5/57/Pawnbroker_Oulu_20090906.JPG)
A pawnbroker is an individual or business (pawnshop or pawn shop) that offers
secured loan
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral, an ...
s to people, with items of
personal property
property is property that is movable. In common law systems, personal property may also be called chattels or personalty. In civil law systems, personal property is often called movable property or movables—any property that can be moved fr ...
used as
collateral
Collateral may refer to:
Business and finance
* Collateral (finance), a borrower's pledge of specific property to a lender, to secure repayment of a loan
* Marketing collateral, in marketing and sales
Arts, entertainment, and media
* ''Collate ...
. The items having been ''pawned'' to the broker are themselves called
''pledges'' or ''pawns'', or simply the collateral. While many items can be pawned, pawnshops typically accept jewelry, musical instruments, home audio equipment, computers, video game systems, coins, gold, silver, televisions, cameras, power tools, firearms, and other relatively valuable items as collateral.
![Pawnbroker's sign, Camden High Street, London](https://upload.wikimedia.org/wikipedia/commons/5/5c/Pawnbroker%27s_sign%2C_Camden_High_Street%2C_London.JPG)
If an item is pawned for a loan (colloquially "hocked" or "popped"), within a certain contractual period of time the pawner may redeem it for the amount of the loan plus some agreed-upon amount for
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
. In the United States the amount of time, and rate of interest, is governed by law and by the state commerce department policies. They have the same license as a bank, which is highly regulated. If the loan is not paid (or extended, if applicable) within the time period, the pawned item will be offered for sale to other customers by the pawnbroker. Unlike other lenders, the pawnbroker does not report the defaulted loan on the customer's credit report, since the pawnbroker has physical possession of the item and may recoup the loan value through outright sale of the item. The pawnbroker also sells items that have been sold outright to them by customers. Some pawnshops are willing to trade items in their shop for items brought to them by customers.
History
The origins of pawn shops have their roots in Ancient China about 3,000 years ago. Pawnbrokers, often working independently, would offer short-term credit to peasants. This trend continued until the civilizations of Ancient Greece and Rome made this concept more mainstream.
In the West, pawnbroking existed in the Ancient Greek and Roman Empires. Most contemporary
Western law
Western law comprises the legal traditions of Western culture, with roots in Roman law and canon law. As Western culture shares a Graeco-Roman Classical and Renaissance cultural influence, so do its legal systems.
History
The rediscovery of th ...
on the subject is derived from the Roman jurisprudence. As the empire spread its culture, pawnbroking went with it. Likewise, in the East, the business model existed in China 1,500 years ago in
Buddhist monasteries
Buddhism ( , ), also known as Buddha Dharma and Dharmavinaya (), is an Indian religion or philosophical tradition based on teachings attributed to the Buddha. It originated in northern India as a -movement in the 5th century BCE, and gra ...
no different from today, through the ages strictly regulated by Imperial or other authorities.
![Pawnshop with sign in usa](https://upload.wikimedia.org/wikipedia/commons/0/02/Pawnshop_with_sign_in_usa.jpg)
In spite of early
Roman Catholic Church
The Catholic Church, also known as the Roman Catholic Church, is the largest Christian church, with 1.3 billion baptized Catholics worldwide . It is among the world's oldest and largest international institutions, and has played a ...
prohibitions against charging
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
on
loan
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...
s, there is some evidence that the
Franciscans
, image = FrancescoCoA PioM.svg
, image_size = 200px
, caption = A cross, Christ's arm and Saint Francis's arm, a universal symbol of the Franciscans
, abbreviation = OFM
, predecessor =
, ...
were permitted to begin the practice as an aid to the poor. In 1338, Edward III pawned his jewels to raise money for his war with France. King Henry V did much the same in 1415. The Lombards were not a popular class, and
Henry VII harried them a good deal. In 1603 an ''Act against Brokers'' was passed and remained on the statute-book until 1872. It was aimed at the many counterfeit brokers in London. This type of broker was evidently regarded as a
fence
A fence is a structure that encloses an area, typically outdoors, and is usually constructed from posts that are connected by boards, wire, rails or netting. A fence differs from a wall in not having a solid foundation along its whole length.
...
.
![Provident Loan Society Essex Houston jeh](https://upload.wikimedia.org/wikipedia/commons/4/4a/Provident_Loan_Society_Essex_Houston_jeh.jpg)
Crusaders, predominantly in France, brokered their land holdings to monasteries and diocese for funds to supply, outfit, and transport their armies to the Holy Land. Instead of outright repayment, the Church reaped a certain amount of crop returns for a certain amount of seasons, which could additionally be re-exchanged in a type of equity.
A pawnbroker can also be a charity. In 1450, Barnaba Manassei, a
Franciscan
The Franciscans are a group of related Mendicant orders, mendicant Christianity, Christian Catholic religious order, religious orders within the Catholic Church. Founded in 1209 by Italian Catholic friar Francis of Assisi, these orders include t ...
friar, began the Monte di Pietà movement in
Perugia
Perugia (, , ; lat, Perusia) is the capital city of Umbria in central Italy, crossed by the River Tiber, and of the province of Perugia.
The city is located about north of Rome and southeast of Florence. It covers a high hilltop and part o ...
, Italy. It provided financial assistance in the form of no-interest loans secured with pawned items. Instead of interest, the Monte di Pietà urged borrowers to make donations to the
Church
Church may refer to:
Religion
* Church (building), a building for Christian religious activities
* Church (congregation), a local congregation of a Christian denomination
* Church service, a formalized period of Christian communal worship
* Chris ...
. It spread through Italy, then to other parts of Europe. The first Monte de Piedad organization in Spain was founded in
Madrid
Madrid ( , ) is the capital and most populous city of Spain. The city has almost 3.4 million inhabitants and a metropolitan area population of approximately 6.7 million. It is the second-largest city in the European Union (EU), and ...
, and from there the idea was transferred to
New Spain
New Spain, officially the Viceroyalty of New Spain ( es, Virreinato de Nueva España, ), or Kingdom of New Spain, was an integral territorial entity of the Spanish Empire, established by Habsburg Spain during the Spanish colonization of the Am ...
by Pedro Romero de Terreros, the Count of Santa Maria de Regla
and
Knight of Calatrava.
The
Nacional Monte de Piedad
The Nacional Monte de Piedad is a not-for-profit institution and pawnshop whose main office is located just off the Zócalo, or main plaza of Mexico City. It was commanded to be built between 1774 and 1777 by Don Pedro Romero de Terreros, the Coun ...
is a charitable institution and pawn shop whose main office is located just off the
Zócalo
The Zócalo () is the common name of the town square, main square in central Mexico City. Prior to the European colonization of the Americas, colonial period, it was the main ceremonial center in the Aztec city of Tenochtitlan. The plaza used t ...
, or main plaza of
Mexico City
Mexico City ( es, link=no, Ciudad de México, ; abbr.: CDMX; Nahuatl: ''Altepetl Mexico'') is the capital and largest city of Mexico, and the most populous city in North America. One of the world's alpha cities, it is located in the Valley o ...
. It was established between 1774 and 1777 by
Pedro Romero de Terreros
Pedro Romero de Terreros (1710–1781), the first Count of Regla, was a mining magnate and philanthropist in 18th century Mexico.
Early life
Pedro Romero de Terreros was born in Cortegana, Spain, on June 28, 1710, the fifth (of six) child and ...
as part of a movement to provide interest-free or low-interest loans to the poor. It was recognized as a national charity in 1927 by the Mexican government.
Today it is a fast-growing institution with over 152 branches all over Mexico and with plans to open a branch in every Mexican city.
Business model
Assessment of items
The pawning process begins when a customer brings an item into a pawn shop. Common items pawned (or, in some instances, sold outright) by customers include
jewelry
Jewellery ( UK) or jewelry (U.S.) consists of decorative items worn for personal adornment, such as brooches, rings, necklaces, earrings, pendants, bracelets, and cufflinks. Jewellery may be attached to the body or the clothes. From a western ...
,
electronics
The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons using electronic devices. Electronics uses active devices to control electron flow by amplification ...
, collectibles,
musical instruments
A musical instrument is a device created or adapted to make musical sounds. In principle, any object that produces sound can be considered a musical instrument—it is through purpose that the object becomes a musical instrument. A person who pl ...
,
tools
A tool is an object that can extend an individual's ability to modify features of the surrounding environment or help them accomplish a particular task. Although many animals use simple tools, only human beings, whose use of stone tools dates ba ...
, and (depending on local regulations)
firearms
A firearm is any type of gun designed to be readily carried and used by an individual. The term is legally defined further in different countries (see Legal definitions).
The first firearms originated in 10th-century China, when bamboo tubes c ...
.
Gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
,
silver
Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
, and
platinum
Platinum is a chemical element with the symbol Pt and atomic number 78. It is a dense, malleable, ductile, highly unreactive, precious, silverish-white transition metal. Its name originates from Spanish , a diminutive of "silver".
Platinu ...
are popular items—which are often purchased, even if in the form of broken jewelry of little value. Metal can still be sold in bulk to a
bullion
Bullion is non-ferrous metal that has been refined to a high standard of elemental purity. The term is ordinarily applied to bulk metal used in the production of coins and especially to precious metals such as gold and silver. It comes from t ...
dealer or
smelter
Smelting is a process of applying heat to ore, to extract a base metal. It is a form of extractive metallurgy. It is used to extract many metals from their ores, including Silver mining#Ore processing, silver, iron-making, iron, copper extracti ...
for the value by weight of the component metals. Similarly, jewelry that contains genuine
gemstones
A gemstone (also called a fine gem, jewel, precious stone, or semiprecious stone) is a piece of mineral crystal which, in cut and polished form, is used to make jewelry or other adornments. However, certain rocks (such as lapis lazuli, opal, an ...
, even if broken or missing pieces, have value.
The pawnbroker assumes the risk that an item might have been stolen. However, laws in many jurisdictions protect both the community and broker from ''unknowingly''
handling stolen goods
Possession of stolen goods is a crime in which an individual has bought, been given, or acquired stolen goods.
In many jurisdictions, if an individual has accepted possession of goods (or property) and knew they were stolen, then the individua ...
(also known as
fencing
Fencing is a group of three related combat sports. The three disciplines in modern fencing are the foil, the épée, and the sabre (also ''saber''); winning points are made through the weapon's contact with an opponent. A fourth discipline, s ...
). These laws often require that the pawnbroker establish positive identification of the seller through photo identification (such as a driver's license or government-issued
identity document
An identity document (also called ID or colloquially as papers) is any documentation, document that may be used to prove a person's identity. If issued in a small, standard credit card size form, it is usually called an identity card (IC, ID c ...
), as well as a holding period placed on an item purchased by a pawnbroker (to allow time for local law enforcement authorities to track stolen items). In some jurisdictions, pawnshops must give a list of all newly pawned items and any associated serial number to police, so the police can determine if any of the items have been reported stolen. Many police departments advise burglary or robbery victims to visit local pawnshops to see if they can locate stolen items. Some pawnshops set up their own screening criteria to avoid buying stolen property.
The pawnbroker assesses an item for its condition and marketability by testing the item and examining it for flaws, scratches or other damage. Another aspect that affects marketability is the supply and demand for the item in the community or region. In some markets, the
used good
Used goods mean any item of personal property offered for sale not as new, including metals in any form except coins that are legal tender, but excluding books, magazines, and postage stamps.
Risks
Furniture, in particular bedding or upholstere ...
s market is so flooded with used stereos and car stereos, for example, that pawnshops will only accept the higher-quality brand names. Alternatively, a customer may offer to pawn an item that is difficult to sell, such as a surfboard in an inland region, or a pair of snowshoes in warm-winter regions. The pawnshop owner either turns down hard-to-sell items, or offers a low price. While some items never get outdated, such as hammers and hand saws, electronics and computer items quickly become obsolete and unsaleable. Pawnshop owners must learn about different makes and models of computers, software, and other electronic equipment, so they can value objects accurately.
To assess value of different items, pawnbrokers use guidebooks ("blue books"), catalogs, Internet search engines, and their own experience. Some pawnbrokers have trained in identification of gems, or employ a specialist to assess jewelry. One of the risks of accepting secondhand goods is that the item may be counterfeit. If the item is counterfeit, such as a fake
Rolex
Rolex SA () is a British-founded Swiss watch designer and manufacturer based in Geneva, Switzerland. Founded in 1905 as ''Wilsdorf and Davis'' by Hans Wilsdorf and Alfred Davis in London, the company registered ''Rolex'' as the brand name of ...
watch, it may have only a fraction of the value of the genuine item. Once the pawnbroker determines the item is genuine and not likely stolen, and that it is marketable, the pawnbroker offers the customer an amount for it. The customer can either sell the item outright if (as in most cases) the pawnbroker is also a licensed secondhand dealer, or offer the item as
collateral
Collateral may refer to:
Business and finance
* Collateral (finance), a borrower's pledge of specific property to a lender, to secure repayment of a loan
* Marketing collateral, in marketing and sales
Arts, entertainment, and media
* ''Collate ...
on a loan. Most pawnshops are willing to negotiate the amount of the loan with the client.
Determining amount of loan
To determine the amount of the loan, the pawnshop owner needs to take into account several factors. A key factor is the predicted resale value of the item. This is often thought of in terms of a range, with the low point being the
wholesale
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
value of the used good, in the case that the pawnshop is unable to sell it to pawnshop customers, and they decide to sell it to a wholesale merchant of used goods. The higher point in the range is the retail sale price in the pawnshop. For example, a five-year-old laptop may have been bought by the customer for $1,000. However, as a used item in a pawnshop, it might only fetch $250 as a purchase price in the pawnshop, because the customers will be wary that it might be a "
lemon
The lemon (''Citrus limon'') is a species of small evergreen trees in the flowering plant family Rutaceae, native to Asia, primarily Northeast India (Assam), Northern Myanmar or China.
The tree's ellipsoidal yellow fruit is used for culin ...
" that the seller is getting rid of because it has some hard-to-detect problem, and because pawnshops do not typically offer a warranty with goods sold. Used electronics wholesalers will buy the laptop from the pawnshop owner for $100 to $150. The wholesaler pays a lower price than the retail value because they have the added cost of hiring electronics technicians who overhaul and repair the items so that they can be sold in used electronics stores.
The pawnshop owner also takes into account their knowledge of
supply and demand
In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...
for the item in question to determine if they think that they will end up selling the laptop for $100 to a wholesaler or $250 to a pawnshop customer. If the pawnshop owner believes that the local market for used laptops is saturated (overloaded with used laptops), they may fear that they will only get $100 for the laptop if they have to unload it to a wholesaler. With that figure in mind as the expected revenue, the pawnshop owner has to factor in the overhead costs of the store (rent, heat, electricity, phone connection, yellow pages advertisement, website costs, staff costs, insurance, alarm system, items lost when they are confiscated by police, etc.), and a profit for the business. As such, the customer who comes in with this laptop that they paid $1,000 for when it was new may be offered as little as $50 by the pawnshop owner, who is taking into account all of the risk and cost factors.
In determining the amount of the loan, the pawnshop owner also assesses the likelihood that the customer will pay the interest for several weeks or months and then return to repay the loan and reclaim the item. Since the key to the pawnshop business model is earning interest on the loaned money, pawnshop owners want to accept items that the customer is likely to want to recover, after having paid interest for a period on the loan. If, in an extreme case, a pawnshop only accepted items that customers had no interest in ever reclaiming, it would not make any money from interest, and the store would in effect become a second-hand dealer. Determining if the customer is likely to return to reclaim an item is a subjective decision, and the pawnshop owner may take many factors into account. For example, if a young able-bodied man comes into the pawnshop to pawn an electric wheelchair (perhaps claiming it to be the possession of his late grandparent), the pawnshop owner may doubt that the item will be redeemed. On the other hand, if a middle-aged man pawns a top quality set of golf clubs, the pawnshop owner may assess it as more credible that he will return for the items. Some customers may attempt to persuade the pawnshop owner that the item in question is important to them ("that necklace belonged to my grandmother, so I will certainly return for it") as a means of obtaining a loan. Other customers return to the same store, repeatedly pawn the same items as a way of borrowing money, and return to pay the interest and recover the items before the end of the loan period; thus, the pawnbroker knows that redemption is likely and will, therefore, make the loan.
The saleability of the item and the amount that the customer wants for it are also factored into the pawnbroker's assessment; if a customer offers a very salable item at a low price, the pawnbroker may accept it even if it is unlikely that the customer will return, because the pawnshop can turn around a quick profit on the item. However, if a customer offers an extremely low price the pawnbroker may turn down the offer because this suggests that the item may either be counterfeit or stolen.
In some countries such as Sweden, there is legislation to prevent the pawnbroker from making unfair profits (
usury
Usury () is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is ch ...
due to financial distress or ignorance of the customer) at the expense of the customer by low valuations of their collaterals. It is stated that the pawnbroker may not keep the collateral but must sell them at public
auction
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...
. Any excess after paying the loan, the interest and auction costs must be paid to the customer. If the item does not fetch a price that will cover these expenses the pawnbroker may keep the item and sell it through other channels. Despite this protection, the cost for the customer to borrow money this way will be high, and if they cannot redeem the collateral it would in many cases be better to sell the goods directly.
Inventory management
Pawnshops have to be careful to manage how many new items they accept as pawns: either too little inventory or too much is bad. A pawnshop might have too little inventory if, for example, it mostly buys jewels and gold that it resells or smelts—or perhaps the pawnshop owner quickly sells most items through specialty shops (e.g., musical instruments to music stores, stereos to used hi-fi audio stores, etc.). In this case, the pawnshop is less interesting to customers, because it is mostly empty.
On the other extreme, a pawnshop with a huge inventory has several disadvantages. If the store is crammed with used athletic gear, old stereos, and old tools, the store owner must spend time and money shelving and sorting items, displaying them on different stands or in glass cases, and monitoring customers to prevent
shoplifting
Shoplifting is the theft of goods from an open retail establishment, typically by concealing a store item on one's person, in pockets, under clothes or in a bag, and leaving the store without paying. With clothing, shoplifters may put on items ...
. If there are too many low-value, poor quality items, such as old toasters, scratched-up 20-year-old TVs, and worn-out sports gear piled into cardboard boxes, the store may begin to look more like a
rummage sale
A jumble sale (UK), bring and buy sale (Australia) or rummage sale (U.S and Canada) is an event at which second hand goods are sold, usually by an institution such as a local Boys' Brigade Company, Scout group, Girlguiding group or church, ...
or
flea market
A flea market (or swap meet) is a type of street market that provides space for vendors to sell previously-owned (second-hand) goods. This type of market is often seasonal. However, in recent years there has been the development of 'formal' ...
. Small, high-value items such as iPod players or cell phones must be in locked glass display cases, which means the owner may need additional staff to unlock the cabinets for items customers want to examine. As a store fills with items, an owner must protect inventory from theft by hiring staff to supervise the different areas or install security cameras and alarms. Too much unsold inventory means that the store has not been able to realize value from these items to provide cash to lend.
The better option lies in the middle: a store with a moderate amount of good quality, brand-name items arranged neatly in the display windows attracts passersby, who are more likely to enter and shop. If items are attractively laid out in display cases and shelves, the pawnshop looks more professional and reputable. Once passersby start shopping in the store, they may be more inclined to pawn or sell their own items to the pawnshop. Some pawnshop owners prevent cluttered look by storing overstocked items, or less attractive items such as snow tires, in a backroom or basement. Some pawnshop companies operate a chain of stores in a state or province. This way, they can balance inventory between stores. For example, they can move some of a rural store's surfeit of fishing gear to an urban store.
Some stores also slim down inventory by selling items to speciality retailers. A pawnshop in a low-income neighborhood that pays a customer $300 for a power amplifier with a used value of $2000 may find the unit hard to sell alongside much less expensive merchandise. They may sell the amplifier to a used audio equipment store whose customers expect higher-end equipment. Some pawnshops sell speciality items online, on
eBay
eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became a ...
or other websites. A speciality item such as a high-end model railroad set may not sell in the store for its "blue book" value. On an online auction, it stands a good chance of bringing a good price.
Another growing trend in the industry is vehicle pawn or auto pawning. This form of pawnbroking works like a traditional pawn loan, however, these stores only accept vehicles as security. Many stores are also accepting "Title Loans", where a customer can pawn the ownership or "Title" documents of their vehicle. This essentially means that the pawnbroker owns the car while the customer continues to drive it, and the customer regain ownership once they pay back their loan.
Auxiliary operations
While the main business activities of a pawnshop are lending money for interest based on valuable items that customers bring in, some pawnshops also undertake other business activities, such as selling brand-new retail items that are in demand in the neighborhood of the store. Depending on where a pawnshop is located, these other retail items may range from musical instruments to firearms. Some pawnbrokers also sell brand-new self-defense items such as pepper spray or stun guns.
Many pawnshops will also trade used items, as long as the transaction turns a profit for pawn shop. In cases where the pawnshop buys items outright, the money is not a loan; it is a straight payment for the item. On sales, the pawnshop may offer
layaway
Layaway (''lay-by'' in Australia, New Zealand, and South Africa) is a purchase agreement in which the seller reserves an item for a consumer until the consumer completes all the payments necessary to pay for that item, and only then hands over the ...
plans, subject to conditions (down payment, regular payments, and forfeiture of previously paid amounts if the item is not paid off).
Some pawnshops may keep a few unusual, high value items on display to capture the interests of passersby, such as a vintage Harley Davidson motorcycle; the owner is not typically expecting to sell these items. Other activities carried out by pawnshops are financial services including fee-based check cashing,
payday loan
A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a short-term unsecured loan, often characterized by high interest rates.
The term "payday" in payday loan refers to ...
s, vehicle title or house title loans, and currency exchange services.
Upscale pawnshops
Upscale pawnshops began to appear in the early 20th century, often referred to as "loan offices", since the term “pawn shop” had a very negative historical reputation at this point. Some of these so-called loan offices are even located in the upper floors of office buildings. The modern euphemism for the upscale pawn shop is the "high-end collateral lender", lending to upper-class often white-collar individuals, including doctors, lawyers and bankers, as well as more colorful individuals like high-rolling gamblers. They are also interchangeably called "upscale pawnshops" and "high-end pawnshops" due to their acceptance of higher value merchandise in exchange for short-term loans. These objects can include wine collections, jewelry, large diamonds, fine art, cars, and unique memorabilia. Loans are often sought to deal with business revenue shortfalls and other expensive fiscal issues. Upscale pawnshops have also been featured in reality television.
Industry
In the US, there are over 11,000 pawnbrokers and an industry revenue of $14.5 billion. The US industry serves 30 million customers.
Symbol
![Pawnbroker's sign, Queen Street Edinburgh](https://upload.wikimedia.org/wikipedia/commons/6/6f/Pawnbroker%27s_sign%2C_Queen_Street_Edinburgh.jpg)
The pawnbrokers' symbol is three spheres suspended from a bar. The three sphere symbol may be indirectly attributed to the
Medici
The House of Medici ( , ) was an Italian banking family and political dynasty that first began to gather prominence under Cosimo de' Medici, in the Republic of Florence during the first half of the 15th century. The family originated in the Muge ...
family of
Florence, Italy
Florence ( ; it, Firenze ) is a city in Central Italy and the capital city of the Tuscany region. It is the most populated city in Tuscany, with 383,083 inhabitants in 2016, and over 1,520,000 in its metropolitan area.Bilancio demografico an ...
, owing to its symbolic meaning in heraldry. This refers to the
Italian region
The regions of Italy ( it, regioni d'Italia) are the first-level administrative divisions of the Italian Republic, constituting its second NUTS administrative level. There are twenty regions, five of which have higher autonomy than the rest. U ...
of
Lombardy
Lombardy ( it, Lombardia, Lombard language, Lombard: ''Lombardia'' or ''Lumbardia' '') is an administrative regions of Italy, region of Italy that covers ; it is located in the northern-central part of the country and has a population of about 10 ...
, where pawn shop banking originated under the name of
Lombard banking
Lombard banking was a mount of piety style of pawn shop in the Middle Ages, a type of banking that originated in prosperous Northern Italy, in a region called Lombardy during the Middle Ages. The term was sometimes used in a derogatory sense, and ...
. It has been conjectured that the golden spheres were originally three flat yellow effigies of
bezant
In the Middle Ages, the term bezant (Old French ''besant'', from Latin ''bizantius aureus'') was used in Western Europe to describe several gold coins of the east, all derived ultimately from the Roman ''solidus''. The word itself comes from th ...
s, or gold coins, laid heraldically upon a
sable
The sable (''Martes zibellina'') is a species of marten, a small omnivorous mammal primarily inhabiting the forest environments of Russia, from the Ural Mountains throughout Siberia, and northern Mongolia. Its habitat also borders eastern Kaza ...
field, but that they were converted into spheres to better attract attention.
Most European towns called the pawn shop the "Lombard". The
Lombards
The Lombards () or Langobards ( la, Langobardi) were a Germanic people who ruled most of the Italian Peninsula from 568 to 774.
The medieval Lombard historian Paul the Deacon wrote in the ''History of the Lombards'' (written between 787 and ...
were a banking community in medieval
London, England
London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a major s ...
. According to legend, a Medici employed by
Charlemagne
Charlemagne ( , ) or Charles the Great ( la, Carolus Magnus; german: Karl der Große; 2 April 747 – 28 January 814), a member of the Carolingian dynasty, was King of the Franks from 768, King of the Lombards from 774, and the first Holy ...
slew a giant using three bags of rocks. The three-ball symbol became the family crest. Since the Medicis were so successful in the financial, banking, and moneylending industries, other families also adopted the symbol. Throughout the Middle Ages,
coats of arms
A coat of arms is a heraldic visual design on an escutcheon (i.e., shield), surcoat, or tabard (the latter two being outer garments). The coat of arms on an escutcheon forms the central element of the full heraldic achievement, which in its wh ...
bore three balls, orbs, plates, discs, coins and more as symbols of monetary success.
Saint Nicholas
Saint Nicholas of Myra, ; la, Sanctus Nicolaus (traditionally 15 March 270 – 6 December 343), also known as Nicholas of Bari, was an early Christian bishop of Greeks, Greek descent from the maritime city of Myra in Asia Minor (; modern-da ...
is the patron saint of pawnbrokers. The symbol has also been attributed to the story of Nicholas giving a poor man's three daughters each a
bag of gold
A money bag (or money sack) is a bag normally used to hold and transport coins and banknotes, often closed with a drawstring.[married
Marriage, also called matrimony or wedlock, is a culturally and often legally recognized union between people called spouses. It establishes rights and obligations between them, as well as between them and their children, and between t ...]
.
In Asia
![Hong Kong Pawn Shop Logo](https://upload.wikimedia.org/wikipedia/commons/5/50/Hong_Kong_Pawn_Shop_Logo.jpg)
In
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
the practice follows the Chinese tradition, and the counter of the shop is typically higher than the average person for security. A customer can only hold up his hand to offer belongings and there is a wooden screen between the door and the counter for customers' privacy. The symbol of a pawn shop in Hong Kong is a
bat
Bats are mammals of the order Chiroptera.''cheir'', "hand" and πτερόν''pteron'', "wing". With their forelimbs adapted as wings, they are the only mammals capable of true and sustained flight. Bats are more agile in flight than most bi ...
holding a
coin
A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
(,
Cantonese
Cantonese ( zh, t=廣東話, s=广东话, first=t, cy=Gwóngdūng wá) is a language within the Chinese (Sinitic) branch of the Sino-Tibetan languages originating from the city of Guangzhou (historically known as Canton) and its surrounding are ...
: ''fūk syú diu gām chín''). The bat signifies fortune and the coin signifies benefits. In Japan, the usual symbol for a pawn shop is a circled number seven because "shichi", the Japanese word for seven, sounds similar to the word for "pawn" ().
The majority of pawnbrokers in Malaysia, a multi-race country wherein
Malaysian Chinese
Malaysian Chinese (; Malay: ''Orang Cina Malaysia''), alternatively Chinese Malaysians, are Malaysian citizens of Han Chinese descent. They form the second largest ethnic group after the Malay majority constituting 22.4% of the Malaysian po ...
consists 25% of the population, are managed by Malaysian Chinese. In Malay, pawn is called "pajak gadai". A valid and licensed pawnshop in Malaysia must always declare themselves as a "pajak gadai" or a pawn shop for their company registration. They must also fulfill the requirements of the
Ministry of Housing and Local Government
The Ministry of Housing and Local Government was a United Kingdom government department formed following the Second World War, covering the areas of housing and local government.
It was formed, as the Ministry of Local Government and Planning, ...
which states the pawn counter must not be higher than 4 feet, is bullet-proof, has stainless-steel counters/doors, strong rooms with automatic locks, safes, equipped with fully computerized system, CCTV, alarm, and pawnbroker insurance.
In the
Philippines
The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no),
* bik, Republika kan Filipinas
* ceb, Republika sa Pilipinas
* cbk, República de Filipinas
* hil, Republ ...
, pawnshops are generally privately-owned businesses and are regulated by the
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas (; commonly abbreviated as BSP in both Filipino and English) is the central bank of the Philippines. It was established on July 3, 1993, pursuant to the provision of Republic Act 7653 or the New Central Bank Act ...
(BSP). Pawnshops in the country traditionally have Spanish names beginning with "Agencia de Empeños" (lit. "Pawn agency"), contrary to "Casa de Empeños" in Spain and Latin America.
Most pawnshops accept jewelry, vehicles or electronic valuables as collateral. They also offer various forms of other finance-related services such as
remittance
A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes wit ...
, bills payment and
microfinancing
Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...
. Therefore, they serve as financial
one stop shop A one-stop shop, in public administration, is a government office where multiple services are offered, allowing customers to access these services in a centralized location rather than in different places.
The term originated in the United States ...
s primarily to communities in which alternatives such as banks are not available. Recently, they have also started conducting services online and through mobile applications although this is yet subject to regulation by the BSP.
In India, the Marwari
Jain
Jainism ( ), also known as Jain Dharma, is an Indian religion. Jainism traces its spiritual ideas and history through the succession of twenty-four tirthankaras (supreme preachers of ''Dharma''), with the first in the current time cycle being ...
community pioneered the pawnbroking business, but today others are involved; the work is done by many agents called "saudagar". Instead of working from a shop, they go to needy people's homes and motivate them to become involved in the business. Pawn shops are often run as part of jewelry stores. Gold, silver, and diamonds are frequently accepted as collateral.
Pawnbroking is also a traditional trade in
Thailand
Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is bo ...
, where pawn shops are run both privately and by local governments.
In
Sri Lanka
Sri Lanka (, ; si, ශ්රී ලංකා, Śrī Laṅkā, translit-std=ISO (); ta, இலங்கை, Ilaṅkai, translit-std=ISO ()), formerly known as Ceylon and officially the Democratic Socialist Republic of Sri Lanka, is an ...
, pawnbroking is a lucrative business engaged in by specialized pawnbrokers as well as commercial banks and other finance companies.
In
Indonesia
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania between the Indian and Pacific oceans. It consists of over 17,000 islands, including Sumatra, Java, Sulawesi, and parts of Borneo and New Guine ...
, there is a state-owned company called
Pegadaian
PT Pegadaian (Persero) is an Indonesian state-owned pawnbroker operated as a subsidiary of Bank Rakyat Indonesia. Formerly a pawnbroking monopoly, its monopoly was legalized in a Dutch East Indies government decree. Several savings and loan co ...
which provides a range of conventional and Sharia-compliant pawnbroking services across the archipelago. The company accepts high-value items such as gold, motor vehicles, and other expensive items as collateral. In addition to pawnbroking activities, the company provides a range of other services, such as a safe deposit box and gold trading services.
See also
*
Consignment shop
Consignment involves selling one's personal goods (clothing, furniture, etc.) through a third-party vendor such as a consignment store or online thrift store. The owner of the goods pays the third-party a portion of the sale for facilitating t ...
*
Lombard banking
Lombard banking was a mount of piety style of pawn shop in the Middle Ages, a type of banking that originated in prosperous Northern Italy, in a region called Lombardy during the Middle Ages. The term was sometimes used in a derogatory sense, and ...
* ''
Wilson v First County Trust Ltd (No 2)
is a United Kingdom human rights, consumer protection and contract law case. It made a decision on the applicability of Art 1, Prot 1 of the ECHR and some important observations on the relevance of Hansard in litigation. It also raised a smal ...
''
003 003, O03, 0O3, OO3 may refer to:
*003, fictional British 00 Agent
*003, former emergency telephone number for the Norwegian ambulance service (until 1986)
*1990 OO3, the asteroid 6131 Towen
* OO3 gauge model railway
*''O03 (O2)'' and other related ...
UKHL 40,
004 004, 0O4, O04, OO4 may refer to:
* 004, fictional British 00 Agent
* 0O4, Corning Municipal Airport (California)
* O04, the Oversea-Chinese Banking Corporation
* Abdul Haq Wasiq, Guantanamo detainee 004
* Junkers Jumo 004 turbojet engine
* Lauda ...
1 AC 816
References
{{Authority control
Informal finance
Retail financial services
Loans
Repurposing