For years, Pawnshop Consulting Group has been studying one increasingly important challenge facing the pawn industry:
How can pawnbrokers reduce their dependence on physical cash while giving customers more choices in how they receive, manage and use their money?
Today, PCG is pleased to announce that the answer is beginning to take shape.
PCG is now introducing a pawn industry cashless payment solution designed to give participating pawnbrokers and their customers another way to move money.
After years of research, industry discussions and evaluation of potential solutions, Pawnshop Consulting Group has established a strategic relationship that will allow us to begin introducing a new bank-backed electronic payout and financial-services platform designed to work within the pawn industry.
The objective is straightforward:
Give pawnbrokers another way to move money while giving their customers greater choice, convenience and access to modern financial services.
Cash Isn’t Going Away — We’re Adding Another Choice
Pawn has always been — and will continue to be — a cash-intensive industry.
This program is not designed to eliminate cash.
Instead, participating pawnshops will have the opportunity to offer consumers another choice.
When a customer receives proceeds from an eligible pawn loan or sells merchandise to the store, that customer may elect to receive the proceeds traditionally in cash or electronically through the new platform.
The enrollment process is designed to be simple. A customer can scan a QR code, complete a streamlined enrollment process on a smartphone and establish access to the platform’s mobile application and electronic wallet.
Once enrolled and approved, eligible transaction proceeds can be delivered electronically into the customer’s account rather than requiring the entire transaction to be paid in physical currency.
The customer can then access and use those funds through the application’s electronic wallet and associated payment functionality. Eligible users can subsequently receive a physical branded payment card, providing another convenient way to access and use their funds.
More Than an Electronic Payout
The customer experience is where this platform begins to become particularly compelling.
For the consumer, the transaction does not end when the proceeds from a pawn loan or merchandise purchase are electronically delivered.
Instead, those funds can become part of a broader mobile financial-services environment designed to give the customer greater flexibility in how money is received, accessed, transferred and used.
Through the application and participating third-party providers, eligible users may have access to a variety of financial and everyday services from their smartphone.
Depending upon availability, applicable regulations and participating providers, those services may include:
- Receiving eligible transaction proceeds electronically
- Accessing funds through a mobile wallet
- Using an associated branded payment card
- Check-cashing services
- Sending money domestically or internationally
- Paying household and utility bills electronically
- Reloading mobile phones
- Purchasing travel and event tickets
- Accessing additional financial and payment services as the platform continues to develop
The objective is convenience.
A customer who walks into a pawnshop needing access to money may ultimately leave with more than the proceeds of that day’s transaction. The customer can potentially leave with access to a broader financial-services platform that remains available from the device already in his or her pocket.
For consumers who increasingly expect immediate electronic access to their money, that represents a significant expansion of choice.
Your Money – Your Way
One of the principles behind the program is simple:
The customer should have a choice.
If cash remains the customer’s preferred method of receiving proceeds, the traditional transaction remains available.
If the customer prefers electronic access, the participating pawnshop can provide another option.
That flexibility may be particularly meaningful for customers who already conduct much of their financial lives through smartphones, mobile wallets, electronic bill payment and payment cards.
Federal Reserve research continues to demonstrate that consumers use a mix of cash, cards and digital payment methods, reinforcing the importance of providing consumers with payment choice.
For the pawnshop, it creates another way to serve the customer without attempting to redefine the fundamental pawn transaction.
Cash remains cash.
Pawn remains pawn.
We’re simply creating another way to move the money.
Why This Matters to Pawnbrokers
The customer benefit is only one side of the equation.
Across the pawn industry, PCG continues to hear from owners and operators who are experiencing increasing challenges associated with obtaining and managing physical currency.
Some financial institutions have reduced cash availability or made larger denominations more difficult to obtain. Some pawn businesses must order currency in advance and wait for it to become available. Others are encountering additional fees, restrictions or operational requirements associated with cash deposits and withdrawals.
For a high-volume pawn operation, managing physical currency also involves employee time, bank runs, security exposure, transportation, reconciliation and substantial amounts of working cash that must remain available inside the business.
PCG’s recent industry research reinforced many of these concerns.
The issue is not whether pawnshops should stop using cash.
They shouldn’t.
The issue is whether cash should remain the only practical option available for every eligible customer transaction.
We believe the industry is ready for another choice.
A Pawn Industry Cashless Payment Solution Moves Into Real-World Deployment
Pawnshop Consulting Group has been studying the industry’s evolving cash-access challenges and potential cashless solutions for years.
The objective was never simply to find another payment product. We wanted to identify a solution that could function within the unique operating environment of a pawnshop, provide meaningful benefits to the consumer and create practical value for the pawnshop owner.
That work has now moved from research and development into the beginning stages of real-world deployment.
PCG recently introduced the program to the pawn community during the California Pawnbrokers Association event in San Diego.
The response was extremely encouraging.
Approximately 30 pawnshop locations expressed interest in moving forward with PCG into the initial demonstration and evaluation stage of the program.
This initial group will provide PCG and our program partners with an opportunity to work directly with pawnshop owners, operators and their customers in actual store environments.
The purpose is straightforward: demonstrate the platform, evaluate the enrollment and transaction process, gather feedback from participating operators and customers, identify opportunities for refinement and ensure that the program performs effectively within the day-to-day realities of the pawn business before a broader industry rollout.
PCG’s Role in the Rollout
Pawnshop Consulting Group will serve as the pawn-industry liaison for the program as the initial deployment moves forward.
Our role is to help connect the technology and financial-services infrastructure with the realities of operating a pawn business.
PCG will work with participating pawnshop owners and operators during the initial deployment, assist with implementation and education, gather field-level feedback and work with our program partners to identify opportunities for continued improvement.
That distinction is important.
This program was not created simply to introduce another financial product into pawnshops.
Our objective is to help develop and deploy a solution that works for pawnshops because it has been evaluated with pawnshops.
The approximately 30 locations entering the initial stage will help us accomplish exactly that.
As the program is demonstrated, evaluated and refined, PCG expects to begin expanding participation to additional qualified pawnshop operators.
And There May Be Another Benefit
There is another component of the program that may make the opportunity particularly interesting for participating pawnshop owners.
Under the contemplated program structure, participating merchants may be eligible to share in certain revenues generated through qualifying downstream customer activity within the platform.
In simple terms, a pawnshop may introduce a customer to the platform through an eligible transaction. That customer may subsequently continue using available financial and payment services within the ecosystem — potentially well beyond the original pawnshop transaction.
Certain qualifying activity may generate continuing revenue participation for the merchant that originated the customer relationship.
That creates an interesting possibility.
A service initially adopted to provide customers with greater payment flexibility and help reduce some of the operational pressures associated with physical cash may also develop into an additional recurring revenue opportunity for participating pawn businesses.
Specific economics, eligibility requirements, participating services and revenue-sharing arrangements will be addressed directly with qualified operators as the program moves through its deployment stages.
Potential Beyond the United States
While the initial deployment of the program is focused on the United States, PCG believes the underlying platform may ultimately provide opportunities in international markets where applicable banking, payment and regulatory frameworks permit.
For Pawnshop Consulting Group, that potential is particularly exciting.
Having worked with pawn businesses across dozens of countries, we know that the challenges associated with moving money, accessing financial services and managing physical cash are not unique to the United States.
Our immediate priority is to successfully demonstrate and refine the program here at home.
From there, we believe the opportunity could become considerably larger.
First, we prove the model.
Interested in Participating?
PCG is now identifying additional pawnshop owners and operators interested in learning more about the program and potentially participating as deployment expands.
If you would like your organization to be considered, click the button below and complete the brief PCG Cashless Financial Platform Program Interest Request.
We want to learn a little about your organization, your current cash-management environment and your interest in the program.
Qualified operators will be contacted by Pawnshop Consulting Group as the program moves through its initial deployment and broader industry rollout.
The pawn industry isn’t abandoning cash.
We’re creating more ways to move it.
Jerry Whitehead
Founder & Senior Strategic Advisor
Pawnshop Consulting Group, LLC
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