Cash America 2012 Annual Report Download - page 40

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jewelry in Mexico due to the large number of potential customers underserved through traditional credit providers and
the limited number of large pawnshop operators in the country.
Consumer Loan Activities
The Company offers consumer loans through many of its retail services locations and over the Internet.
According to the Community Financial Services Association, industry analysts estimate that there were approximately
21,000 consumer loan storefront locations across the United States during 2012. While the consumer loan industry grew
significantly during the 1990’s into the early 2000’s with the addition of new storefront locations, the storefront growth
has begun to contract in the past several years. This is due in part to changes in laws and regulations governing
consumer loans in various states. As a result, management believes that opportunities in the United States for growth are
limited at the storefront level and has elected to concentrate its efforts on the online lending channel for growth in its
consumer loan business both in the United States and in foreign countries.
Numerous competitors offer consumer loan products and services, and many significant competitors are
privately held, making it difficult for the Company to determine its competitive position in the market. However, the
Company believes its principal online competitors in the United States include Miami Nation Enterprises, Integrity
Advance, Think Finance and certain offshore lenders, many of whom offer consumer loans under multiple brand names
and domains. Storefront consumer loan lenders that offer loans online or in storefronts are also a source of competition
in most of the markets where the Company offers consumer loans online or in storefronts, including Advance America,
Ace Cash Express, Check ‘n Go, Dollar Financial and Check Into Cash. In the United Kingdom, the Company believes
that its principal online competitors include PaydayUK, Wonga and Lending Stream. In Australia, the Company believes
its main online competitors are Cash Doctors, PaydayMate and First Stop Money. In Canada, the industry has been
dominated by storefront lenders, and as a result, the Company’s principal competitors are not online lenders but
storefront lenders, such as Money Mart and The Cash Store.
Management believes that competition for the online lending channel continues to be fragmented and is
primarily from competitors who may be operating either off-shore or by partnering with Native American tribes and
utilizing their status as a sovereign nation and do not operate under the same complex regulatory environment as the
Company. Management believes that the principal competitive factors in the consumer loan industry consist of the
ability to provide sufficient loan size to consumers to meet their loan requests, speed of funding, customer privacy, ease
of access, transparency of fees and interest, and customer service.
Impediments exist that prevent new entrants from easily entering the online lending market. New entrants must
successfully implement underwriting and fraud prevention processes, incur high marketing and customer acquisition
costs, overcome consumer brand loyalty and have sufficient capital to withstand early losses associated with unseasoned
loan portfolios. In addition, there are substantial regulatory and compliance costs, including the need for expertise to
customize products associated with licenses to lend in various states in the United States and in many international
jurisdictions.
In addition to consumer loan lenders, the Company also competes with financial institutions, such as banks,
credit unions, other consumer lenders and retail businesses offering similar financial services. Other lenders may and do
lend money on terms more favorable than those offered by the Company. The Company believes that there is also
indirect competition to some of its products and services, including bank overdraft facilities and banks’ and retailers’
insufficient funds policies, many of which may be more expensive alternative approaches for consumers to cover their
bills and expenses than the consumer loan products and services offered by the Company.
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