What follows is a position paper by the ATM Industry Association - (Hat tip to worried.)
I'd like to ask "investor" and "10 year investor" to explain to us how NASI can pay a guaranteed 20% return to its investors while investing the proceeds in a business that yields on average 7%. The figure comes from a white paper by ATMIA. If you want to see it quoted by the financial press, search my posts. There aren't many.
If you can't answer this question in a coherent way, professionals will classify you as "dumb money" or faith based investors and your comments will likely be ignored as having no useful content.
__________________________________________
Position: ATMIA
1 believes the practice of selling ATMs to private investors involves
key risks which should all be identified upfront during negotiations and that this
disclosure of risks should be part of best practice in the private investment model
for ATM sales.
Background
One fairly recent ATM business model involves selling ATMs to private investors, who
then lease them back to the seller or a third party for a fixed or variable rental. However,
this type of arrangement creates a risk of loss for the investors when the ATM placement
fails to support the anticipated rate of return on investment. This is particularly the case
when the lease arrangement is accompanied by ‘guaranteed’ rates of return, when it is not
always possible to guarantee transaction levels for ATM installations, particularly at new
sites. When the guaranteed returns are funded by further ATM sales, the arrangement has
the hallmarks of a Ponzi scheme.
Problems with this model have resulted in substantial bad publicity to the ATM industry.
It should be noted that only a tiny fraction of ATMs are sold in today’s worldwide
industry using this model. Nevertheless, it is important to adopt best practice in each
case. Unfortunate examples of private investments in ATM sales and leases which have
failed are very much the exception rather than the norm in an otherwise robust, well governed and well-established ATM industry.
1. The ATM Industry Association is a global, non-profit trade association serving all businesses and groups in the ATM industry. The association is made up of over 2500 members in 60 countries. We currently represent over one million ATMs internationally. For more information go to –
http://www.atmia.com.
Statement of Position
This model can only work if all the key risks involved are identified and discussed during
negotiations, especially if the potential investors are using life savings to fund the
purchases. It is vital to safeguard against significant personal losses of private savings by
informing the private investor of such factors as past performance of similar investments
and the on-going risks of failure.
Another best practice should be to exclude guaranteed investment returns on ATM
installations, which create the risk that the arrangement comprises a Ponzi scheme.
Rationale for Position
Significant risk factors, listed below, and bad publicity for the ATM industry arising from
this business model, have prompted the Association to issue this position paper as a
necessary word of caution.
One important risk is that the ATMs sold will not achieve the average number of
monthly transactions projected at the time of the sale, or that the ATM may, in
fact, become unprofitable; in these cases, such ATMs will not generate adequate
revenue to fund the “guarantee” return promised to the capital investors, raising
the financial risk profile of the company adopting this model.
There are important contractual risks in that the model depends upon third-party
service-providers actually delivering on all their contractual obligations for
servicing, maintaining and replenishing machines on an on-going basis.
Further risk factors include the need for a continued appetite of private investors
to invest in ATMs in order to keep supplying new ATMs to ensure growth of the
company employing this business model and funding ongoing guaranteed returns
– an unlikely scenario given the bad publicity which has already been generated.
Recommendation
For the above reasons, ATMIA strongly recommends the immediate implementation of
these best practices for all private investment business models for ATM sales, given that
the current situation is clearly untenable.
), but do it. Go repossess YOUR machines, exercise your right as stated in your contract. You don't have any reason to complain on this website, just repossess your machines.
