It's been a rough year for ATM leasing.

Several prominent finance sources, including Advanta and Orix, stopped writing leases for ATMs; many others are tightening their credit criteria and becoming increasingly wary of doing business with ISOs.

"Unfortunately, there are some unscrupulous companies out there," said Dave Marbin, sales manager of Marlin Leasing's Atlanta office.

Too many sales reps deviate from written contracts to make "side deals" with merchants, Marbin explained. When they don't honor the terms of these unwritten agreements, the merchant often stops paying his lease, and the finance company ends up with an unwanted machine. "We get stuck with a lot of equipment that way."

Mount Laurel, N.J.-based Marlin, which also has offices in Atlanta and Denver, stopped financing ATMs for several months earlier this year. "We had a ton of bad business with CCC," Marbin said, referring to Credit Card Center, the Philadelphia ISO that filed for bankruptcy on June 6 after failing to settle complaints of nonpayment from merchants and several vendors, including NCR and Tidel.

Marlin recently re-evaluated its decision and decided to re-enter the ATM business – but in a limited way. The company intends to recruit "good, solid ISOs" and do business only with those vendors, Marbin said.

Marlin just announced an agreement to process applications for Financial Technologies (FTI), a Jackson, Miss.-based distributor with about 3,000 ATMs under contract in the U.S. It's the second such arrangement for Marlin, which also has a partnership with Peachtree City, Ga.-based Hanco Systems.

Marlin may evaluate additional ISOs in the coming months, Marbin said. "We hope to open up the business to more vendors, but it will be a slow evolution. There's been too much of a downturn in this type of business."

FTI was attractive to Marlin for several reasons, Marbin said, including its practice of running its own credit checks on merchants before submitting applications to Marlin. "They send us deals they know we can do."

The agreement with Marlin won't be a "one size fits all" solution for his company, said FTI Vice President DeLone Wilson. FTI will continue to offer a variety of leasing options, including an in-house program it developed about two years ago for merchants with good credit who have been in business less than two years.

Wilson said the Marlin program will be available to both its direct sales force and to its 50 or so independent distributors. It will offer several advantages of special interest to the independents, such as a quick turnaround time for applications.

"Our relationship with Marlin makes our business seem like we have stepped back in time about three years, and that is a very good thing," he said. "While leasing has become a serious challenge to both our competitors and us, we can now count on the majority of leases that we submit being approved and within only a couple of hours. We feel like this will be a significant advantage for us and especially our network of independent distributors."

Some other large distributors and ATM manufacturers are establishing alliances with leasing companies by agreeing to assume some of the financial risk associated with loan defaults. Triton Systems, for instance, last month introduced a financing program for its Canadian distributors after establishing a relationship with CitiCapital's Canadian office.

However, FTI is not assuming any of the risk in its deals with Marlin. "We've spent considerable time, effort and energy building our business," Wilson said. "Taking recourse for deals would be a little like mortgaging our future."