You're Marty Chamoff, the owner of two Debby's Hallmark stores in Raleigh, N.C., and Christmas is around the corner. You offer extended hours and have hired extra help to accommodate the growing line of customers. You wonder if there's some way you can serve more customers without compromising your bottom line.

Perhaps installing a contactless payment system is the way to go to speed up transactions and increase your sales volume. You know that radio frequency identification (RFID) technology can be embedded into American Express, Visa, and MasterCards so that all the customer has to do is tap her card or key fob at the point of sale (POS) reader and her account is charged without ever leaving her hand.

In addition, mobile phones equipped with NFC, or near field communication technology, can communicate with a merchant RFID reader to complete a transaction. This payment system works best for small transactions, called micro-payments, where the transaction is under $10. For these micro-payments a signature is not required, although for transactions above $25, the customer needs to sign or input a personal identification number for a debit transaction.

The next frontier for contactless payments

Retail customers already enjoy using their contactless cards at gas stations such as Exxon Mobil and Shell, at fast food restaurants such as McDonald's and Arby's, and at drug stores such as CVS, where the transactions are small and customers want to be in and out as quickly as possible. So are small businesses the next frontier for contactless cards?

Unfortunately, there are still a few hurdles. "Using contactless payments is a great idea, but unfortunately, my bank doesn't offer it," says Chamoff. "Our entire system has to be compatible with this technology in order to be successful and right now it isn't."

According to Forrester Research, the Cambridge, Mass. IT research company, many merchants hit a wall when the banks and payment system operators can't agree on who should front the initial investment costs for this new technology. And even if the banks can agree, merchants may not be willing to invest in RFID, or their business may not be the best fit for contactless payments.

Concerns remain about contactless cards

The types of businesses best suited for contactless payment systems include convenience-type stores or other retail businesses that need to move many customers through the point of sale with low cost purchases as quickly as possible. The infrastructure needed to accept contactless payments includes hardware terminals and the necessary software to integrate the data into the existing accounting system.

Many small businesses still have reservations about upgrading. Such is the case for Nollie Jones, owner of a UPS franchise in Raleigh, N.C. He says that he often spends longer with his customers than other businesses "since they wait for us to measure, weigh, and pack their packages."  Adds Jones, "I'm also concerned that the person swiping the card may not be the owner of that card." Furthermore, Jones would receive virtually no savings from MasterCard or Visa for switching to contactless payment systems and that it would take a long time to recoup the initial investment costs.

Looking ahead, contactless systems will replace cash for small transactions in businesses where there's high volume and relationship-building with the customer is not the priority. Already 19 million RFID credit and debit cards have been issued since 2003, according to Forrester. However, once the public accepts the ease of payment and trusts that this system is a secure one, more merchants and banks will invest in this technology so customers won't shop somewhere else.

SIDEBAR: Contactless payment systems in the U.S.

MasterCard PayPass -- launched in 2005 with 10 million registered users.

American Express ExpressPay -- launched in July 2003 with 3 million registered users.

Visa payWave -- launched in December 2006 with 6 million registered users.

Source: Forrester Research