（Original Video in Japanese was published on the FINOLAB CHANNEL on Apr. 15, 2025）

Thank you for tuning in to FINOLAB’s FinTech Topics. In this edition, we explore the digital transformation of one of the most traditional financial services: the pawnshop. While pawnshops have long been part of everyday financial life, today we are seeing a new wave—services moving online, combining centuries-old models with modern technology.

The Origins and Role of Pawnshops

Pawnshops have a surprisingly long history, predating banks and formal lending institutions. The core idea is simple: customers deposit valuable items as collateral and receive a loan in return. If the loan is not repaid by a set date, the item is forfeited and sold. This model existed in ancient Greece and Rome, and in Japan, records date back to the Kamakura period. However, it was during the Edo period that pawnshops became widely adopted as a source of financing for the general public. In this sense, pawnshops represent a fundamental form of finance.

In Japan, operating a pawnshop requires a license under the Pawnshop Business Act. Even if the service is online, the same license is necessary. Applications must be submitted to the local police department’s Public Safety Division, and approvals are granted by the prefectural Public Safety Commission. This is distinct from the licensing required for other types of moneylending or financial institutions.

Furthermore, since pawned items can eventually be sold, a secondhand dealer license is also required—especially for online resale through auctions or e-commerce platforms. This license is also issued by the Public Safety Commission via the police.

Changing Trends: Pawnshops vs. Secondhand Dealers

Japan’s secondhand goods market—especially in branded goods—is growing steadily. Meanwhile, the number of licensed pawnshops continues to decline. Interestingly, after amendments to the Secondhand Articles Dealer Act in 2020, the number of secondhand dealers initially dropped due to re-registration but has since rebounded. This trend suggests a shift in how value is exchanged—more people are turning to resale rather than collateral-based borrowing.

Online Pawnshops as a Modern Finance Tool

By moving pawnshop services online, traditional businesses are embracing digital finance. These platforms offer a quick, hassle-free way to obtain short-term loans, especially appealing for users seeking faster alternatives to consumer loans. While online pawnshops are still a niche compared to the broader consumer finance sector, they’re starting to attract attention due to ease of use and the ability to bypass face-to-face interactions.

Another growing area is the purchase and resale of secondhand goods. Consumers no longer need to visit physical stores; now they can sell or pawn items online with AI-powered evaluations. This has been particularly successful for brand-name goods, electronics, and jewelry, where value assessments can be streamlined and transactions executed quickly.

Global Case Studies

Several startups around the world are leading the charge in online pawnshop services:

• iPawn (USA): Originally an online pawn loan provider, iPawn now focuses on gold buyback services.
  
• Cash Converters (UK & Australia): Targets lower-income demographics and offers both lending and resale services for items like home appliances, electronics, and jewelry.
  
• PawnHero (Philippines): Founded in 2015, it accepts mobile phones, jewelry, and branded items via delivery service. Loans are processed quickly after AI appraisal.
  
• Cashify (India): Focused on digital devices like smartphones and laptops, catering to India’s large low-income population. Items are evaluated online and shipped for fast payouts.
  

The Japanese Market: Room to Grow?

In Japan, auction services like Mercari and Yahoo Auctions have made secondhand item trading popular, so the concept of turning unused items into cash is well established. However, these services can involve long wait times and tricky price negotiations. Online pawnshops address these issues by offering immediate cash solutions.

Though Japanese consumers were hesitant in the past about buying used goods, attitudes have shifted. The reuse market for smartphones, electronics, and luxury goods continues to expand. There is growing potential for pawnshop services to serve a broader, everyday market beyond high-end items.

Examples of Online Pawnshop Services in Japan

• Shichiya Kanteikyoku (Pawn Appraisal Bureau): A hybrid service combining online evaluations for branded goods and electronics with in-store support.
  
• Daikokuya: A nationwide chain that offers evaluations via messenger app, LINE. Users can send photos of their items and receive loans after mailing them in.
  
• Garage Bank: A startup founded in 2020 that operates the CASHARI service. Users discreetly take photos of their items with their smartphone, receive appraisals, and instantly convert them into funds. The platform allows for flexible options—users can keep using their item, sell it, or donate it after a certain period.
  

Looking Ahead

The emergence of online pawnshops highlights a broader global trend: the digitalization of traditional finance. Across the world, companies are rethinking how collateral is evaluated, what items are accepted, and how loans are disbursed. In Japan, the success of secondhand platforms and AI-powered evaluations point to a growing acceptance of online pawnshops as a viable financial tool.

As technology continues to evolve, we may see even more innovative offerings that go beyond the conventional pawnshop model—blending speed, convenience, and flexibility to meet the changing needs of modern consumers.