Pawnshops Then and Now: How the Digital Transformation Changed Pawnshops
A couple of decades ago, it was probably a novel idea for most people to think that they could do so many tasks digitally. Things, like shopping online, paying bills, and even learning a new course, are now part of the online space, and it’s helped tremendously in the way people live their lives. Thanks in part to the continuous innovation of the tech industry, the digitization of our everyday tasks has spread to other sectors, like pawning.
Traditionally, pawning was done face-to-face. You had to present your collateral to the shop and surrender it physically for inspection before any agreements could take place. Now, online pawning allows you to list your item on pawnshops so you can get offers more quickly and lessen the hassle of having to make trips to physical stores frequently.
To better understand the state of the pawnshop industry, it’s worth learning about the history of pawnbroking and how it came to be. Check out the infographic below for an informative timeline.
The History of Pawning Explained
Believe it or not, pawning has been a long-standing practice since the ancient civilizations. Pawnbroking can be considered as one of the people’s oldest financial models. With a rich history, it’s gone a long way from what it was during the Chinese civilization to its development to an online business.
Here are the most notable changes that have happened throughout the years.
The earliest sign of pawnbrokers was seen in Chinese civilization some 3,000 years ago. Buddhist monks operated these inside monasteries before its widespread adoption by the public. This system was formed so that lower-class citizens could afford to make loans and apply for short-term credit. The practice was wholesome and intended to help citizens, as it was forbidden to charge interest rates at the time.
Greece and Rome
The practice of pawning also became popular in the West, where Greek and Roman societies ran independent pawnshops. The Roman Empire was credited as the first civilization to turn pawnbroking into a lucrative business. They would charge exorbitant amounts of interest for pawned items, rendering a lot of participants broke in the process. Emperor Augustus was even said to use funds from properties confiscated from criminals and loaned money to citizens who could promise to pledge collateral valued twice the amount borrowed.
As Catholicism became popular, the practice of pawning became strict and had to abide by a set of rules. The Church believed that this could be a great way to help the less fortunate. Absurd interest rates were abolished, and it served to benefit people who were less financially capable. However, after it was clear that this business model was also hurting the pawnbrokers, the Church was forced to allow the stipulation of modest interest rates again.
This became controversial as people thought charging interest was a sin. Pope Leo X, the pope during this time, publicly announced that he thought pawnshops were lawful and valuable to the community to stop the uproar. The controversy marks the beginning of the negative connotation associated with pawnbroking, as people were divided on whether pawning was “good” or “bad” through the lens of religion.
As the system made its way around the globe, people began to realize how much of a useful business model this is for both the lender and the borrower. As such, the stigma it acquired in the earlier years slowly went away and was just replaced by strict regulations for operations.
Several physical shops started opening, all licensed and legal to operate under the governing laws of the state or country they’re in. The first places where pawnshops were spotted in the U.S. was somewhere in the second decade of the 19th century—and their numbers have been increasing ever since.
The Birth of Ecommerce
Since pawning had a buy-and-sell concept, when ecommerce boomed in the late 2000s, it gave a new platform to the long-standing practice. This further ensured that pawning wouldn’t become a defunct business model and would continue to endure the test of time.
Today, pawning is an excellent option for people who are low on cash and would like to get a great bargain for their possessions.
Facts About Pawnshops Throughout the Years
There is a lot of trivia in the pawning industry that highlights its importance in modern times. Here are just some of them:
- The word “pawn” comes from the Latin word “patinum,” meaning cloth or clothing. In the Chinese era, the most valuable possessions of lower-class workers were their clothes, and these would be what they would pawn. It wasn’t until the lucrative rule during the ancient Roman period that clothes were no longer accepted in the system.
- The practice of charging interest on borrowers was called usury. The rulers during medieval Europe who were supporting the pawning business model were all seen as usurers by their people.
- The Medici Family of Italy and House of Lombard of England were two of the most popular pawning operators during the medieval Europe period, and their business spread throughout Europe. They are credited for the iconic logo of three golden balls that are still in use today.
- During the Great Depression in the United States, pawnshops were among the only financial institutions offering cash for borrowers as banks were failing. This shows how powerful and timeless the business model is.
- In the year 1828, pawnshops became so essential to people’s lives that there was one item pawned for every person in New York City at the time.
- The nursery rhyme “Pop Goes the Weasel” references the act of pawning. A weasel is a borrower and to “pop” is to pawn. “That’s the way the money goes… pop goes the weasel.”
- St. Nicholas became widely recognized as the patron saint of pawnbrokers. Pawnshops would hang three golden balls to give tribute and ask for luck from the saint.
The Future of Online Pawning
With the tech advancements and online pawnshops today, it’s safe to say that the future of pawning is bright. Since three millennia ago, the practice has proven to be a source of funds not just for individuals but businesses as well. It’s a great alternative to banks and other forms of financial intuitions with quick returns.
Many reputable online pawning companies provide excellent rates, convenience, and fast services should you be in the position to need it. PawnHero is one of the most trusted online money lending apps in the Philippines with an experienced team to help guide you through the process of pawning. In just a few clicks, you can quickly pawn your item, receive assistance, and get the cash you need. With online pawning on the rise, it’s about time people adapt to more modern financial services.