In China, O2O is the most popular business model for pawning.
The common process of online-pawning is: a customer makes a request on the website of a physical pawnshop, then the pawnshop will contact the pawner if it is interested in the pawn. However, the crucial step of a pawn transaction is completed offline. The borrower should take his/her pawn to the pawnshop (or the pawnshop might offer a door-to-door service occasionally), the inspection and quotation of the pawn will both be completed face to face.
There are two approaches to provide online-pawning services in China:
- Incorporating a company to be engaged in pawning and this company faces the customer to conduct pawning through its own website or through the third party platform; or
- Incorporating a company to set up an online platform on which the pawn shop and the customer could meet and close the deal.
As for (a), as a pawn shop, the company shall apply to competent MOFCOM, which is in charge of commerce operation, and obtain the License for Operation of Pawn Business.
The valid term of the License for Operation of Pawn Business is 3 years.
After obtaining the above license, the pawn shop could further apply for an ICP filing in order to set up a website through which it could face the customer to do business. If it conducts the business through the third party platform, it is not necessary to obtain an ICP filing.
As for (b), the FinTechs just set up a platform/website for matching the pawn shop and the customer. In that event, the FinTech running the platform is not required to obtain a special license to provide such services.
To sum up, licenses and rules above shall be applied to any pawn shops including online ones.
There are only a few companies providing online-pawning services in China, such as Tianhua Pawnshop and Easydang.
Norah Yinuo Zhang