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[Summary] The Rise of Online Pawnshops: Blending Traditional Finance with Digital Innovation | FinTech Topics #115

FinTech Topics, RESEARCH

[Summary] The Rise of Online Pawnshops: Blending Traditional Finance with Digital Innovation | FinTech Topics #115

(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.

[On-Site Report] Money 20/20 2025 Asia, One of the World’s Largest Fintech Events: Introducing 6 Emerging Startups Unknown to Japanese Audiences

FINOLAB COLUMN, RESEARCH

[On-Site Report] Money 20/20 2025 Asia, One of the World’s Largest Fintech Events: Introducing 6 Emerging Startups Unknown to Japanese Audiences

（Original article in Japanese was published for FinTech Journal on May. 26, 2025）
https://www.sbbit.jp/article/fj/163878
Author: Makoto Shibata, Head of FINOLAB

Money20/20 Asia 2025, one of the world’s largest fintech events, was held from April 22–24 in Bangkok, Thailand, at the Queen Sirikit National Convention Center (QSNCC). Since its inception in 2012 in the U.S., Money20/20 has grown into a global platform driving innovation in payments, financial services, and technology, now spanning Europe, the Middle East, and Asia.

After being previously hosted in Singapore, the Asia edition returned in 2024 to Bangkok post-COVID. The 2025 schedule includes events in:

  • Bangkok (Asia): April 22–24
  • Amsterdam (Europe): June 3–5
  • Riyadh (Middle East): September 15–17
  • Las Vegas (USA): October 26–29

What Sets Money20/20 Different?

A key strength of the event is its focus on networking. Attendees can use the official app to view participant profiles, request meetings, and reschedule if needed. The Connections Lounge, centrally located in the venue, facilitated 15-minute meetings with impressive efficiency compared to other global events.

Main Theme and 3 Key Topics at Money20/20 Asia

The overarching theme of Money20/20 Asia was:
“Empowering Humanity Through Collaboration: Pioneering Secure, Frictionless, and Sustainable Fintech Innovation in Asia.”
Though somewhat abstract, this theme reflects an effort to highlight the regional uniqueness of the Asian fintech landscape.

Key Topic 1: Cross-Border Payments

Cross-border remittances and payments dominated the exhibition floor. Global players like Wise and Nium showcased their services, along with blockchain-based solutions from Circle, Ripple, and others.
E-commerce-focused payment providers such as LianLian Global and Worldline also had a strong presence. Major international and local banks, as well as Visa and Mastercard, emphasized global payment services.
Overall, the event had similarities with SWIFT’s annual SIBOS conference.

Key Topic 2: AI and Fintech

AI-powered innovation in finance was a hot topic across four main stages.
Generative AI’s impact on regulation, business operations, innovation, and fundraising was discussed from various perspectives (regulators, banks, startups, VCs).
While assessments varied, all agreed that AI is driving an unprecedented transformation in finance.

Key Topic 3: Financial Inclusion and Sustainability

There were discussions around expanding access to financial services and balancing environmental goals with economic growth—especially relevant in Asia’s diverse economies.
However, these sessions received less attention, as most participants were more focused on payment-related themes.

6 Notable Startups You Might Not Know About in Japan:

At the venue, areas like “Innovation Village” and “Startup Hangout” showcased promising startups aiming to break away from traditional finance. Among them, the following six stood out for their innovation and business scalability:

  1. OmniWave
    Provides next-gen asset management intelligence using AI and machine learning. Unlike many startups vaguely claiming to use AI, OmniWave clearly demonstrated value by analyzing big data—including social media—to generate actionable investment advice.
  2. Riverchain
    Targets the construction industry with digital solutions for working capital and supply chain efficiency. A standout for embedding finance into a traditionally analog industry through focused digital transformation.
  3. Papaya
    Offers POS and payment systems tailored for F&B shops in Southeast Asia. It focuses not on technical innovation but on usability for small businesses, helping them benefit from digital payments.
  4. Coded Solution
    Aims to connect Web3 and AI, offering tokenization, blockchain infrastructure, and digital payments. Unlike many vague Web3 pitches, they showed concrete use cases like securities issuance and stablecoin-based payments.
  5. Giraffe AI Labs
    Bridges legacy finance with blockchain through advanced market technologies and infrastructure. Based in Singapore, with expansion into Dubai and Canada, they aim to become a global fintech player.
  6. Payd
    Provides earned wage access for freelancers and part-timers, already serving over 100,000 users in Thailand and Malaysia. Their approach meets the growing need for flexible financial services across employment types.

Themes from Six Japanese Representatives

At the event with 250+ speakers, six Japanese speakers from regulators, financial institutions, startups, and VCs spoke on:

  • Kenji Ikeda (Financial Services Agency): Japan’s approach to sustainable fintech and green finance collaboration across Asia.
  • Nobuya Kawasaki (Mitsubishi UFJ Bank Singapore): How legacy banks innovate and collaborate with startups to handle digital transformation.
  • Kohei Ueda (Mizuho Bank Singapore): AI, blockchain, and machine learning’s impact on banking and challenges in tech adoption.
  • Shinichi Takatori (Kyash CEO): The future of banks focusing on smartphone-centric customer experience and debates on human vs AI customer service.
  • Takeshi Nagasawa (Merpay CEO): Fintech’s role in driving next-gen e-commerce payments amidst growing competition.
  • Akio Tanaka (Headline Asia): Venture capital trends in fintech amid the AI revolution and global investment outlook.

What Should Japanese Fintech Stakeholders Learn?

Money 20/20 Asia, while smaller than other fintech events, offered a well-balanced program with keynotes, panels, exhibitions, and networking. The event was user-friendly with thoughtful logistics for attendees. However, the heavy focus on payment solutions may have left participants interested in other areas wanting more. It would provide some learnings to us in Japan to think about planning any FinTech related events in the future.

[Summary] Amendment to the Payment Services Act (2025) – Summary of Key Points | FinTech Topics #114

FinTech Topics

[Summary] Amendment to the Payment Services Act (2025) – Summary of Key Points | FinTech Topics #114

（Original Video in Japanese was published on the FINOLAB CHANNEL on Mar. 25, 2025）

Evolution of the Payment Services Act

Before diving into the details of the latest amendment, let’s take a quick look at the evolution of the Payment Services Act since its enactment in 2009:

  • 2009: A new category called “funds transfer business” was introduced, allowing non-banking entities to engage in remittance services.
  • 2016: With the rise of Bitcoin and other virtual currencies, a registration system for cryptocurrency exchanges was introduced.
  • 2019: The term “virtual currency” was changed to “crypto assets,” and regulations on exchanges were tightened. To protect users’ assets, offline (cold storage) management became mandatory.
  • 2022: Regulations were introduced to accommodate stablecoins as a payment method. The transfer limit for funds transfer businesses was raised, and a three-tier licensing system (Type 1, Type 2, and Type 3) was established.

These amendments reflect the industry’s response to technological advancements and emerging use cases.

Key Points of the 2025 Payment Services Act Amendment

The main aspects of the amendment, which was approved by the Cabinet in March 2025, include the following:

1. Introduction of Domestic Asset Retention Orders for Crypto Asset Exchanges

Previously, there was concern that crypto asset exchanges handling spot transactions could transfer their assets overseas. The amendment allows the government to issue asset retention orders to prevent such outflows.

2. Flexible Management Requirements for Trust-Based Stablecoin Reserves

Previously, stablecoin issuers were required to hold reserves in full as demand deposits. The amendment allows issuers to hold up to 50% of their reserves in low-risk assets such as government bonds or redeemable term deposits. This change is expected to enhance the international competitiveness of stablecoins issued in Japan.

Although no registration was permitted  for stablecnin operator after the new regulation in 2022, SBI VC Trade, part of the SBI Group, has become the first company in Japan to register for handling stablecoins. It plans to offer USDC, issued by Circle.

3. Establishment of a Brokerage Category for Crypto Asset Transactions

Until now, entities engaging only in mediating crypto asset transactions were required to register as full-fledged exchanges, creating high entry barriers. The amendment introduces a new brokerage category, allowing intermediaries to operate under a separate, more appropriate regulatory framework. This change aligns with financial regulations in other sectors and is expected to promote new service providers.

4. Regulation of Cross-Border Payment Collection Services

Recent regulatory changes now impose rules on cross-border payment collection services, which were previously unregulated. While these services do not require a funds transfer business license under the current framework, some have been misused for illegal activities such as online gambling and investment fraud. To address these risks, new regulations have been introduced.

  • The new rules aim to crack down on unregistered operators involved in illegal fund transfers. For services with higher risks, additional regulations will enhance consumer protection and strengthen anti-money laundering (AML) measures.
  • Cross-border payment collection services that do not directly facilitate product or service transactions will now be subject to funds transfer regulations. However, low-risk services—such as platforms directly involved in transactions or escrow services—may be exempt if they are already regulated under other laws.

Some industry groups, including the Japan Association of New Economy, have raised concerns that excessive regulation could harm digital payment services. They urge policymakers to ensure that the new rules are focused on actual risks and do not disrupt existing ecosystems like e-payments and point-based settlements. As the final details of these regulations take shape, it will be important to monitor their impact on businesses and innovation.

5. Faster Refund Process for Users in the Event of a Funds Transfer Business Failure

Previously, even when funds transfer businesses secured user assets through bank guarantees or trusts, refunds were processed through a government-led procedure, taking at least 170 days. The recent amendment introduces direct refund options, allowing banks and trust companies to return funds to users without going through the traditional process. This change enhances consumer protection and ensures faster access to funds in the event of a business failure, improving the overall efficiency of financial services.

Future Outlook

The 2025 amendment is expected to:

  • Reduce the burden on stablecoin issuers, promoting stablecoin adoption in Japan.
  • Lower barriers to entry for crypto asset intermediaries, expanding financial business opportunities.
  • Introduce new regulations for cross-border collection services, with ongoing discussions on implementation details.

As the regulatory framework continues to evolve, stakeholders will be closely watching the government’s next steps, including specific regulations under ministerial ordinances.

[Summary] Diversification of Online and Mobile Banks: Leveraging BaaS and New Industry Entrants | FinTech Topics #113

FinTech Topics

[Summary] Diversification of Online and Mobile Banks: Leveraging BaaS and New Industry Entrants | FinTech Topics #113

（Original Video in Japanese was published on the FINOLAB CHANNEL on Feb. 10, 2025）

This article summarizes the FINOLAB CHANNEL’s FinTech Topics #113 video, which discusses the diversification of online and mobile banks in Japan, focusing on the utilization of Banking as a Service (BaaS) and the entry of new business sectors into the financial industry.

The First Generation of Internet Banks

The video begins by noting that over two decades have passed since the emergence of the first generation of internet-only banks in Japan. These initial players, while some have rebranded, laid the groundwork for today’s digital banking landscape. These include Japan Net Bank (now PayPay Bank), Sony Bank, eBank Bank (now Rakuten Bank), Sumitomo SBI Net Bank (which actively promotes its BaaS platform under the name NEOBANK), and Jibun Bank (now au Jibun Bank).

The Second Generation and Mobile-Only Approaches

Following the initial wave, a second generation of online banks has emerged, often in collaboration with other financial institutions or as part of larger internet groups. These include Daiwa NEXT Bank (linked with Daiwa Securities), GMO Aozora Net Bank (part of GMO Group), Minna Bank (part of Fukuoka Financial Group), and UI Bank (part of Tokyo Kiraboshi Financial Group). Notably, some of these newer banks have adopted a mobile-only strategy, solely focusing on smartphone-based transactions.

Convenience Store Banks

Alongside these developments, major convenience store chains like Seven Bank, Lawson Bank, and AEON Bank have also established their own banks. While having ATM networks, these convenience store banks can be considered similar to online banks due to their lack of traditional branch networks.

Banking as a Service (BaaS) and NEOBANK

The discussion then shifts to Banking as a Service (BaaS), with Sumitomo SBI Net Bank’s NEOBANK highlighted as a key player. NEOBANK partners with various industries to create new banking services. Examples include JAL NEOBANK (with Japan Airlines), Takashimaya NEOBANK (with the department store, Takashimaya), Yamada NEOBANK (with electronics retailer chain, Yamada Denki), Dai-ichi Life NEOBANK (with Dai-ichi Life Insurance), SBI Securities NEOBANK, and SBI Remit NEOBANK.

Recent Developments in BaaS Partnerships

The video emphasizes significant developments in BaaS in the past 2 years, with new entrants from diverse sectors. These include:

  • Transportation: JRE Bank (a partnership between JR East and Rakuten Bank, launched in May 2024, offering railway-related benefits), and KEIO NEOBANK (a collaboration between Keio Corporation and Sumitomo SBI Net Bank, from Sep. 2023, providing services linked to Keio Passport card membership and benefits along the Keio railway lines).
  • Real Estate: Hebel Haus NEOBANK (a service from Asahi Kasei Homes and Sumitomo SBI Net Bank, launched in June 2024, tailored for residents of Hebel Haus, offering enhanced housing loan guarantees), and Yutaka Bank (a service from KI-Star Real Estate and Sumitomo SBI Net Bank, focusing on housing loans and KI Points), .
  • Energy: Katene Bank from Dec. 2024 (a partnership between Chubu Electric Power and Sumitomo SBI Net Bank, offering benefits like housing loan discounts and points for electricity/gas usage), and a planned collaboration between Kansai Electric Power, UI Bank, and Kiraboshi Group to create a new bank focused on zero-carbon initiatives, where deposits will fund environmentally friendly projects and offer eco-friendly housing loans.

Digital Banks for Small and Medium-sized Enterprises (SMEs)

The video also introduces the concept of digital banks specifically targeting SMEs, such as the planned 01 Bank. This initiative by Ikeda Senshu Bank, a regional bank from Osaka, utilizing GMO Aozora Net Bank’s BaaS platform, aims to launch in fiscal year 2024 with significantly lower initial investment compared to first-generation online banks. 01 Bank intends to integrate with various cloud services used by SMEs (e.g., accounting, expense management) to streamline financial operations and create a compelling banking service.

Key Trends and Future Outlook

The video concludes by highlighting several key trends:

  • Evolution of branchless banking: New online/mobile banking services prioritize smartphone applications.
  • Lower entry barriers: BaaS significantly reduces the initial investment required to launch a digital bank.
  • Diversification of BaaS providers: The BaaS landscape is becoming more competitive, with multiple online/digital banks offering these services.
  • Synergy with core businesses: New entrants are increasingly focused on creating synergies between their existing businesses and their banking services to offer unique value propositions to customers.
  • Impact of rising interest rates: The return to a world with interest rates allows banks to differentiate their services more effectively.

Overall, the Japanese online and mobile banking sector is experiencing significant diversification driven by the adoption of BaaS, enabling companies from various industries to enter the financial services market and offer tailored banking solutions to their customer bases.

[Summary] The Digitalization of End-of-Life Planning – Addressing the Needs of a Super-Aging Society | FinTech Topics #112

FinTech Topics

[Summary] The Digitalization of End-of-Life Planning – Addressing the Needs of a Super-Aging Society | FinTech Topics #112

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

Japan’s Growing Need for Digital End-of-Life Planning

With Japan’s rapidly aging population, end-of-life planning (終活, shūkatsu) is becoming increasingly important. By 2025, one in five people in Japan will be over 75, bringing significant challenges in pensions, healthcare, and caregiving. Traditionally, end-of-life planning focused on funeral arrangements and inheritance, but in recent years, it has expanded to include personal reflection, life organization, and most notably—digital assets.

The Rise of Digital End-of-Life Planning

As financial transactions and social interactions move online, digital legacy management has become a growing concern. Many elderly individuals now use the internet, with about half of those in their 70s actively online. However, digital assets—ranging from online banking accounts and subscription services to social media profiles and cryptocurrency holdings—can be difficult for family members to manage after one’s passing.

Without proper planning, families may struggle to access or even become unaware of valuable digital assets, leading to financial loss or the continuation of unnecessary subscription fees. This has created a demand for digital solutions that help organize and transfer digital assets effectively.

Common Challenges in Managing Digital Assets

Key issues that arise after an individual’s passing include:

  • Inaccessible Online Accounts: Without passwords, families cannot access social media, email, or banking services.
  • Unclaimed Digital Assets: Cryptocurrencies, e-money, and other digital financial holdings may go unnoticed.
  • Ongoing Subscriptions: Services linked to credit cards (e.g., streaming, cloud storage) may continue to charge fees indefinitely.
  • Legal Complexities: Navigating inheritance laws for digital assets is often more complicated than for physical property.

How to Prepare for Digital End-of-Life Planning

The National Consumer Affairs Center of Japan recommends the following steps to ensure a smooth digital inheritance process:

  • Document Important Passwords Securely: Write down smartphone, email, and key account passwords and store them in a secure location. However, be cautious about security risks.
  • Organize Account Information: List all active online services, including social media, subscriptions, and financial accounts.
  • Create an “Ending Note”: A document that outlines what should happen to digital assets and personal belongings after passing.
  • Appoint a Trusted Contact: Designate a family member or close friend who can access important accounts when necessary.

Emerging Digital Solutions for End-of-Life Planning

To address these challenges, various digital services have emerged in Japan, offering solutions for managing and transferring digital assets:

  • tayorie: Sends pre-written messages and important information to designated recipients when specific conditions are met, ensuring that vital details reach the right people.
  • Yuigon Net（遺言ネット）: A service supervised by legal professionals to help users create digital wills and organize end-of-life documents.
  • Digital Legacy Services by J-Factory: Assists with retrieving, organizing, and securely disposing of digital data.
  • Digital Keeper: Enables individuals to securely store and transfer login credentials and digital assets to their families.
  • SonaSapo（そなサポ ）： A real estate-related service supporting seamless inheritance processes via a digital platform.
  • SMBC Digital Safety Box: A digital vault that allows users to store important documents and instructions for their heirs.

Future Outlook and Challenges

As digital transformation accelerates, the need for structured end-of-life digital asset management will continue to grow. Additionally, as Japan experiences a rise in single-person households, new services will be required to address cases where there are no immediate family members to manage digital legacies.

The digitalization of end-of-life planning is still evolving, but the demand for secure, user-friendly solutions will only increase. It is crucial for individuals to start organizing their digital assets early, ensuring a smooth transition for their loved ones.