Mister Money discovers demand in credit-hungry Mexican market

FORT COLLINS Doug Wills company is going south.

Happily, hell contend.

Will is president and CFO of Mister Money Holdings Inc., a Fort Collins-based operator of pawnshops and payday loan outlets.

The company has 46 pawn stores which operate as Mister Money USA in the United States, but the future is increasingly south of the border.

Last year Mister Money grew from seven stores in Mexico to 13, and expects to add “five to seven” stores in Mexico this year.

“Most of our growth the last couple of years and going forward will be in Mexico,” Will said.

The Mexican expansion for Mister Money is part of a rising demand in that country for credit, which is difficult to obtain through tight-fisted banks.

“The market is an untapped market with regard to the number of people and number of outlets there,” Will said.

In the U.S., pawn loans are typically seen as the bite-the-bullet option for people who have to operate outside the world of banks and credit cards. That usually means a low-income clientele.

In Mexico, Mister Money is finding customers among the Mexican middle-class. That usually means a lower percentage of forfeitures on the pawned goods. Thats favorable, because it means more clients are paying off loans to Mister Money.

The credit crunch in Mexico, and related pawnshop growth, was recently highlighted in a July 18, 2003, story in The Wall Street Journal titled “Mexicos bankless credit boom.”

According to the Journal, Mexicos ratio of credit to gross domestic product is just 13.3 percent, compared to 48.5 percent in the U.S.

The Journal story said Mexican customers redeem 80 percent of their pawn loans, compared to 70 percent in the U.S. Mexicans are also used to dealing with high interest rates from conventional lending sources, and so are less deterred by the high interest rates that come with pawn loans.

“Its been very positive,” Will said of the Mexican operations. “The types of collateral, in many cases, are nicer and better than what we get up here.”

Will said Mister Money shops have even taken Rolex watches on occasion.

Mexico offers other advantages. In the U.S., the industry operates under numerous regulations, including caps on interest rates, careful merchandise checking for stolen goods and zoning laws that limit locations. Regulations are less strident in Mexico.

The companys strategy in Mexico is to place its stores inside Wal-Marts or other locations that attract a middle-class audience.

The promise of the Mexican market may not measure up to Mister Moneys most recent innovation. The company has developed a kiosk technology, similar to an ATM, that generates payday loans.

“Except this doesnt dispense cash, it dispenses checks,” Will said. The loan recipient then cashes the check at the store where the kiosk is located usually a grocery store.

The business, which Mister Money calls U.S. Recovery Service, includes proprietary software that conducts credit scoring while the customer waits.

The kiosk network, now at 60 sites, puts Mister Money in the booming cash advance industry, which conducts an estimated $65 billion a day in transactions.

“It will certainly be an emphasis for the next 12 to 24 months,” Will said.

Mister Money has also set up relationships with various credit unions to use the kiosks in the credit lobby as a means to provide small loans to members.

Mister Money was founded in 1976 in Fort Collins when Doug Wills sister and brother-in-law, Tim Lanham, acquired the Mister Pawn Shop store in downtown Fort Collins.

Will joined Lanham, still CEO of the company, a year later. In 1989 the partners decided to expand the pawn shop concept and changed the name to Mister Money in the early 90s,

“Thats when we started on franchising,” Will said.

Last year the company pulled back on its franchising goals, and bought back 16 of its franchise stores, growing the number of corporate stores to 28. With remaining franchises, there are 46 Mister Money USA stores in nine states.

“As we look for ways to position the company for future growth, future acquisitions and possibly and IPO situation, its become necessary to gradually start pulling the stores together under one corporate entity,” Will explained.

The combination of the franchise merger, growth in Mexico and the cash-advance kiosks, allowed the company to total $21.2 million in sales last year, more than doubling its $9.7 million in 2002.

Mister Money took a setback last spring when its shop at 2104 S. College Ave. collapsed under the weight of the record-setting March blizzard. Since then, the company found a new south Fort Collins location at 111 W. Monroe Drive.

Despite the weather disaster, theres not much to keep Mister Money from having a sunny disposition.

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