Why there are fewer pawnshops: new challenges for old institutions

Paraphrasing the well-known saying “tell me who your friend is, and I’ll tell you who you are”, you can say: tell me what kind of infrastructure you see around you, and I’ll tell you in which country and at what time you live. In the pre-war years, it was hard not to notice that the number of pawnshops grew like mushrooms after the rain. One taxi driver I know told me that his customers were often people of marginal appearance who took washing machines, televisions and other household items to the pawnshop in order to quickly get some money and to make ends meet or something.
Recently, it has become noticeable that pawnshops decreased (at the same time, the network of pubs confidently continues to grow – also a sign of the times, which speaks for itself). So, if in 2021 there were more than 300 pawnshops in Ukraine, then in 2024 there will be less than 150. At first glance, the negative dynamics in this industry are surprising. After all, the number of Ukrainians who find themselves in difficult financial conditions is growing, and the services of “pledge oases” seem to be becoming more and more appropriate. What is the matter? What happened to half of the “treasure islands”?
Hard regulatory pressure
The fact is that the National Bank of Ukraine has strengthened control over pawnshops. The regulator introduced requirements to increase capital, increase reporting standards and transparency of ownership. For many, especially small pawnshops, these requirements were too difficult due to limited financial resources. Because of this, both small regional institutions and medium-sized companies, which could not withstand the competition and pressure, left the market. This resulted in the market becoming more structured and stable.
The economic crisis, deepened by the war, also affected the situation. Incomes of the population decreased and the demand for secured loans fell. In many regions, especially near war zones, pawnshops closed due to lack of customers and economic disadvantage.
The demand for quick loans has remained, but has changed. Microfinance organizations and banks offer loans without collateral, with more flexible terms and lower rates. Because of this, customers choose them instead of pawn shops. Those who still use pawnshops want better service and better terms.
Pawn shops remaining in the market are forced to adapt to new conditions. They are changing their business models, investing in digital technologies and trying to work more efficiently. The market is becoming more centralized, where only the most stable and competitive companies remain.
These changes show that Ukrainians are changing their financial behavior. People are looking for new ways of financing that do not require collateral loans. This can be a good sign, in particular, the improvement of financial literacy or the growth of trust in banks.
Despite all these trends, the reduction in the number of pawnshops does not mean their final disappearance. On the contrary, those who survive this turbulent period can become stronger and offer new services adapted to modern needs.
Thanks to which certain pawnshops remain on the market
In particular, among those who managed to stay afloat, the network “Skarbnytsia” stands out – one of the flagships of domestic “magic chests”. Thanks to a wide network of branches, the implementation of digital solutions and the ability to quickly respond to new challenges, “Skarbnytsia” has maintained its position as a leader.
But this network is not the only one. “Blago” pawnshops actively integrate innovations: online collateral assessment, remote processing of loans and mobile applications have become a tool for customer retention. “Capital” bets on an individual approach and loyalty programs, which helps them maintain a loyal customer base. “Partner” maintains its position thanks to an extensive branch network, ensuring the availability of its services even in the most remote corners of the country.
Pawnshop is convenient when speed is above all else
All of us face financial challenges sooner or later. The moment when you urgently need money, makes you think: who to turn to? A pawnshop, a bank or a microfinance organization? The choice seems obvious, but only at first glance. The difference between these institutions can be decisive for your financial peace of mind.
Pawn shops are the first choice for those looking for instant help. Jewelry, appliances, even antiques – all this can be turned into money in a matter of minutes. No long queues, bureaucracy and credit history questions. But, as they say, speed has its price. A pawnshop will give money quickly, but at a high interest rate, and if the debt is not returned on time, your jewelry or your favorite smartphone may become the property of someone else.
Pawn shops are the choice for those who have collateral and are willing to take the risk to solve the problem here and now. Jewelry and precious metals stand out among the most common types of collateral. Gold, silver, platinum and jewelry made from them are always appreciated due to their stable value and market demand. In times of crisis, these items become a lifeline for many families.
Household appliances and electronics are no less popular collateral. Smartphones, laptops, TVs and tablets are things without which it is difficult to imagine modern life. At the same time, their high liquidity makes them attractive to pawnbrokers.
A pawnshop can become an alternative source of finance for vehicle owners. Cars, motorcycles and even scooters are accepted as collateral, which allows you to get significant sums for a short period of time.
Real estate – apartments, houses and land plots – is considered a particularly valuable collateral. Such assets usually provide a large amount of credit, but require careful appraisal and paperwork.
Antiques and works of art also have their niche in pawnshops. Paintings, antique furniture or collectibles can be a reliable guarantee of financial support, especially if they have historical or artistic value.
Do not forget about branded items: watches, bags or accessories of well-known brands. Status items have always been valued, and their value is often not lost over time.
Therefore, a pawnshop is not only about money, but also about the opportunity to find a solution in the most difficult moments, relying on property that has value.
The bank is for those who seek stability and long-term planning
However, for those who look at financial issues globally, a bank is a more reliable ally. If you have a good credit history and enough time, a bank loan will be a more profitable option. Lower interest rates, large sums and a convenient payment schedule – all this speaks in favor of banks. But you should not expect that money will appear in your pocket immediately. Banking bureaucracy is a real marathon with references, checks and expectations. So the bank is for those who value reliability and plan their finances for years to come.
Microfinance organization: when you need money for salary
If you find yourself in a situation where the salary is still a few days away, and the wallet is already empty, a microfinance organization can be your savior. The main trump card of the MFI is simplicity and speed. A few clicks in the application – and money on your card. Everything looks perfect until you see the interest rates. MFIs are, without a doubt, “emergency help” for finances, but the price for such a service can become a debt trap. This is an acceptable choice for those who need a small amount for a short period of time and are ready for high overpayments.
How not to make a mistake in the choice?
Before casting lots, which choice to resort to, you should ask yourself: how much money do you need? How fast can you get them back? Are you willing to provide collateral? If the amount is small, and the decision must be made urgently, a pawnshop or an MFI are your options. If you want to plan for the future and have time to prepare, a bank is the best option.
Choosing a financial institution is not only a matter of money, but also of your approach to solving problems. Speed or stability? Risk or certainty? It all depends on your needs and capabilities. After all, each of us decides for ourselves which path to choose at the moment of a financial challenge.
Although there have been fewer pawnshops, this does not mean that they will disappear completely. Those that survive can become stronger and offer new services that meet today’s needs.
Tetyana Viktorova