Pawn Shops, Payday Loan Stores Gaining Acceptance in Canada
By J.J. CameronPayday Loan Writer
Only recently, pawn shops and instant payday loan operations were considered shady operations in Quebec. But now these establishments are gaining respectability as legitimate retailers and money lenders.
"The industry is being transformed," says Robert Tessier, head of Canada's largest chain of pawn shops - Comptant.com - established in Quebec five years ago through mergers and reorganization of existing shops.
With 24 outlets and more than 100 employees, Tessier said "lots of small independents are gone now, and they were the ones more at risk of getting stolen goods. My guys are salaried, so they have no interest in fencing stolen goods."
While payday loans are still debated in Canada, the pawning business has become so viable that some hock shops are actually publicly traded now. Fourteen years ago, Cash Canada Group Ltd. of Alberta became the country's first company to trade on the stock exchange while specializing in the acquisition and operation of pawn shops.
"Within the next year, we are mandated to open new stores across Canada," company official David Frederiksen said from head office in Edmonton. "Cash Canada's objective was and is to consolidate this industry and integrate a modern corporate structure that is committed to a clean, bright environment providing excellent service and products to our customers."
Going public was something long overdue for the industry, says Mary Jackson of Texas-based Cash America International Inc., which first sold five million common shares in 1987. The payday loan company, which started out as one pawn shop in Irving, Texas., 23 years ago, now owns and operates nearly 470 outlets in 22 states.
Jackson, vice-president of public affairs, said in a phone interview from Fort Worth that 70 per cent of last year's $600 million in revenue was generated through the Cash America Pawn division. The parent company offers cheque-cashing and payday advance services in addition to pawnbrokering.
Cash America bills itself as the industry leader serving the needs of the under-banked community in the U.S. Clients would not be approved for personal loans in any other manner.
"We treat our customers with the same respect as regular bank customers," Jackson said.
While she said the average pawn transaction is about $60 - "loans too small for banks to handle" - Jackson pointed out that Cash America was involved in 350,000 $5-pawn loans in 2005.
"That's someone pawning a belt buckle for gas money," she offered as an example.
Not a terrible arrangement. As the payday loan battle continues in the nation, this is the sort of defense providers will use.
