Mark Sethi, a perfume store owner, had high hopes for the wireless credit card terminal he bought last year for accepting plastic at flea markets and street fairs.

The terminal, which cost $1,600, has helped capture some larger transactions-$200 to $500-that Mr. Sethi would have lost if customers had had to pay cash. But it fails repeatedly and is slow to complete authorizations.

"I lose many sales because of that," said Mr. Sethi, whose New York retail store is called Columbus Perfumery.

His complaints are painful for the telecommunications companies and credit card processors struggling to sell wireless technology. While these vendors have laid the groundwork for financial payments via airwaves, Mr. Sethi's situation speaks to some of the pitfalls.

The technology has generated some excitement. By relying on the cellular telephone system, it connects taxi drivers, pizza deliverers, tow truck drivers, traveling salespeople, and other mobile businesspeople to payment networks and widens the acceptance of credit and debit cards.

But the high costs of entry, bulky equipment, and unreliable connections have worked against the remote payment devices.

Cheerleaders for the technology say falling telecommunications prices and more efficient terminals have arrived, making the wireless option more attractive to traditional telephone-dependent merchants.

"We are sitting at the intersection of a dynamically changing environment in the communications industry, where wireless is becoming much more prevalent and economical," said Roger L. Peirce, chairman and chief executive officer of U.S. Wireless Data Inc. of Emeryville, Calif.

Mr. Peirce, a former top technology executive at Visa International and later First Data Corp. whose move to U.S. Wireless was announced last month, said the "evolution of electronic payments and acceptance goes hand- in-hand with merchants finding electronic payments more desirable."

Wireless credit card acceptance has been around for years, and a small number of mobile merchants have used it for a while. Now that the technology has improved, Mr. Peirce and other advocates say it is a matter of time before more people embrace it.

"All of the elements for this to be very successful are in fact in place," said John Marshall, senior vice president of sales at Hypercom Corp., the Phoenix-based terminal maker. "Phone companies are getting competitive with dial-up services."

There have been some success stories. Mark Levitt, owner of the Miami franchise of the limousine service Super Shuttle, said a successful test of wireless terminals in five of his vans led to a decision in March to equip all 70.

Mr. Levitt said drivers were thrilled to get rid of the old-fashioned credit card imprint devices, derided as "knuckle-busters." On-line authorizations take only a few seconds, and Mr. Levitt sees the cash in his account the next day.

The terminals also have "cut down on driver credit card fraud," he said.

Mr. Levitt declined to say how much the wireless units increased revenues, but his credit card volume is up 15% since the shuttle service went electronic. Drivers are collecting bigger tips and Mr. Levitt feels he has tighter control over his business.

Mr. Levitt's system is based on the technical standard known as CDPD, or cellular digital packet data. Excess capacity on cellular networks is used for sending packets of data across the airwaves. CDPD is faster and cheaper than some other methods, experts said, because customers are charged by the packet rather than by the minute.

Still, national penetration is lacking. CDPD is concentrated on the Eastern Seaboard.

Another standard, Mobitex, has a wider geographic reach and covers areas missed by CDPD, including Los Angeles. The Mobitex distributor in the United States is BellSouth Corp. of Atlanta. The approach is similar to CDPD but uses radio frequencies rather than piggybacking on existing cellular systems.

Ricochet, developed by Metricom Inc. of Los Gatos, Calif., uses utility poles to relay radio transmissions to a central station. So far, the network is available only in San Francisco and Washington State. Metricom has received approval from California's Public Utilities Commission to install a network in central and Southern California.

Given the multiple networks, processors must be ready to support any emerging standard.

"We have to be on top of everything that is going on," said Daniel S. DeBraal, vice president of product development at Vital Processing Services, Tempe, Ariz.

Vital, a merchant processing joint venture of Visa U.S.A. and Total System Services Inc., acts as a bridge between clients and telephone networks. It also helps terminal manufacturers develop software.

Wireless technology is attracting newcomers to the card processing business. U.S. Wireless Data has begun to promote itself as an end-to-end processor for wireless customers and has focused on becoming a supplier to merchant processors-a community Mr. Peirce knows well from his past jobs.

U.S. Wireless is marketing TranzEnabler, which converts a Verifone card authorization terminal from dial-up to wireless. Mr. Peirce said U.S. Wireless can lower authorization time to three seconds from the typical 11 to 20 seconds on dial connections.

Wireless technology "has got to be cost competitive with the land-based system," Mr. Peirce said. And "it has to be very fast."

Gooitech of Schaumburg, Ill., sells a wireless automated teller machine system.

The company hopes to use the same technology for a card processing product, WecPoint, which it will sell to small businesses for $3,000 (plus $85 to $250 a month in telecommunications charges).

"We're just as interested in the standard POS transaction as anyone else," said James Solomon, president and chief executive officer of Gooitech. "Part of that is to understand the customer's business first, then develop an application."

For example, many convenience stores need separate telecommunications links for the cash register, credit cards, state lotteries, and ATM, Mr. Solomon said. The WecPoint package would consolidate those into one.

Gooitech and its competitors see vast opportunity in Eastern Europe, China, and Latin America, which lack adequate telephone infrastructures and are leapfrogging straight to wireless.

In the United States, some merchants are still waiting for equipment costs to come down, said Mr. DeBraal of Vital. That will happen when more people use the system, he said.

Mr. Peirce said, "I predict by the end of the next decade, it will probably be forgotten that pizza restaurants, limousines, and taxicabs didn't take credit or debit cards."

Naeem Iqbal, a New York taxi driver, keeps a wireless unit on the floor of his passenger seat. He bought the terminal a year ago from CardService International of Agoura Hills, Calif., after a cashless passenger stiffed him for a $180 fare to New Jersey.

Mr. Iqbal said the machine's two-minute authorization time is not the only drawback. When passengers pay by credit card, "you have to report it" for tax purposes, he said.

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