Advance Payday - Hurst, Texas, United States

The US consumer finance industry consists of about 3,500 companies with combined annual revenue of about $35 billion. Major companies include Ace Cash Express, Advance America, Check 'n Go, Check Into Cash, and DFC Global (formerly Dollar Financial). The industry is highly concentrated: the top 50 companies account for about 90 percent of revenue.

Companies in the industry engage primarily in making personal and payday loans to consumers. Pawn shops, which also make loans to consumers, are covered in the Used Merchandise Stores profile.

COMPETITIVE LANDSCAPE

Demand is driven by consumer income and demographics. The profitability of individual companies depends on the correct assessment of repayment likelihood and effective collections activities. Large companies enjoy economies of scale in securing access to capital. Small companies can compete effectively by choosing favorable locations. The industry is capital-intensive: annual revenue per worker is about $400,000.

The federal financial reform law passed in 2010 could create a tougher business environment for consumer finance firms. New measures in the law include restricting credit cards companies from imposing interest rate hikes and fees, limiting payday loans, and discouraging auto title loans. The law also created a Consumer Financial Protection Bureau (CFPB) to take over consumer-protection responsibilities from other federal agencies. The sweeping regulatory reforms could fundamentally change the competitive environment of the consumer finance industry.

PRODUCTS, OPERATIONS & TECHNOLOGY

Consumer finance companies primarily provide unsecured cash or payday loans. Some companies in the industry also ...

• State job growth rose 2.5% in February 2012 from a year ago; national job growth rose 1.6%
• State unemployment averaged 7.2% in February 2012; the national average was 8.3%
• Personal income rose 6.1% to $1 trillion in Q4 2011 from a year ago.
• Tax revenue increased 12.6% in Q4 2011 from a year ago.
• Exports rose 13.3% to $32.7 billion in the first two months of 2012 from a year ago.
• Venture capital investment in TX rose 53.9% to $306.2 million in Q4 2011 from a year ago.