Canada    FinTech Guide    Chapter 12    Japan

12. Online-Pawning
Japan  Japan

Considering the fact that CASH had to suspend its services after one day as a result of the flooding of users, consumers' demand for online-pawning services and similar services is considered to be large.

Legal Affairs

In order to engage in the pawnbroker business, it is necessary to obtain permission, with respect to each business office, from the public safety commission of the prefecture having jurisdiction over the location of the relevant business office (Id., Art. 2, para. 1). The Act also stipulates the obligation to install a facility for keeping pawned articles that satisfies the criteria set by the relevant public safety commission (Id., Art. 7), the obligation to confirm the address, age and occupation of the pawner and to report any illicit articles to the police (Id., Art. 13) and the obligation to prepare and maintain books and records (Id., Art. 14 and Art. 15). It is a common perception that the interest rate may not exceed 109.5% per annum (0.3% per diem) (see Id., Art. 36); however, there are arguments regarding the permissible interest rate as described later below.

As of September 2017, there is no company known to be engaging in online-pawning services, however, a similar service called "CASH" has got public attention.

Regardless of whether the pawnbroker business or the secondhand articles business is adopted, it is necessary to comply with the regulations applicable to BtoC business as a whole. It is also necessary to pay attention not to violate the Act against Unjustifiable Premiums and Misleading Representations, the Personal Information Protection Act, and, when engaging in the secondhand articles business, the Act on Specified Commercial Transactions.

Economic Conditions

Online-pawning services are not yet spread in Japan. In June 2017, Bank, Inc. launched an online-pawning service called "CASH". When the service of CASH was commenced, users instantly flooded because money was promptly remitted based on the assessment of only the pictures of articles sent by the users (In about 16 hours and 30 minutes, more than 7000 loans were granted, which amounted to more than 350 million yen in total.). As a result, applications for the service exceeded the operator's processing capacity and CASH suspended its service only after the first day. CASH resumed its operation in August 2017 upon amending the system of the service by, for example, setting the cap on the amount to be cashed in a day.

Contributing Authors

Ushijima & Partners

Hiroyasu Kageshima
Tokyo, Japan

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018