Beyond the main headlines about pawnshop operator First Cash Financial Services (NASDAQ:FCFS) running up third-quarter sales 28% and profits up 25% over last year is the growth in the hidden component of its business: the pawn shops and payday lending services in and around Mexico.

Pawn balances in Mexico shot up 30% year over year, to $13.3 million, compared to the 13% increase in domestic pawn balances, which grew to $21.4 million. First Cash operates in eight states in Mexico and, with many stores amassed along the Texas side of the border, heavily serves the so-called "unbanked" population, largely Mexican.

Foolish editor Joey Khattab referenced the unbanked when he discussed the growth of peer-to-peer lending as a disruptive force in the world of banking. The unbanked and underbanked -- people with little or no ties to hoary financial institutions like Bank of America (NYSE:BAC) -- are still finding access to cash and cash-related services. A 2004 report by Financial DNA LLC estimated the opportunity at $3.5 billion to $4 billion, with potential growth to a $10 billion market.

According to the report, the typical Mexican worker in the U.S. sends back to Mexico some $2,000 a year, with the average transaction at $300 each. This field has typically been ruled by Western Union (NYSE:WU). On the other side of the border, some Mexicans don't have checking accounts and go to pawnshops for small loans. The biggest pawnshop in Mexico is Nacional Monte de Piedad, located on the site of Moctezuma's Axayacatl palace, and is owned by the Mexican government.

Business with Mexicans is typically better than similar business with Americans in that Mexicans have lower forfeiture rates than their U.S. counterparts. They typically repay a higher percentage of their loans, 80% or more, compared with 70% in the U.S. For those customers who can't repay their loans, Mexican or American, First Cash and other pawnshop operators subsequently sell the property secured by the loan, which is a lucrative business itself. First Cash reported that gross margins from sales of pawn merchandise had increased to 41% year to date, while for the third quarter it was 42%, up from the 39% mark it achieved last year.

Both Wal-Mart (NYSE:WMT) and French supermarket retailer Carrefour recognize the profit potential of the Mexican pawnshop/payday lending business, installing pawnshop chains within their stores. They have become the de facto bank for the bankless Mexican.

Considering First Cash trades at a premium to competitors Cash America (NYSE:CSH) and EZCORP (NASDAQ:EZPW) and is close to its 52-week high, you might be tempted to think the company is richly priced here. But it reiterated its increased earnings guidance for 2006 at $0.96 to $0.97, a 28% increase over 2005, and expects as much as a 34% increase in 2007 earnings, to $1.30 per share. That would give it a forward price-earnings-growth (PEG) ratio of just 0.58 for next year's earnings, and less for 2007.

With more store openings planned, and additional Auto Master buy here/pay here used-car dealerships in the works, First Cash Financial may just end up having investors flush with cash.

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.