Countertop Compost Pail – A Temporary Stop-Over?

We have a stainless steel countertop compost pail (1 gallon) and were led to believe that we could make compost in it. From reading articles on the Internet, it would appear that this is nothing more than a temporary stop before the material gets transferred into an actual compost pile. What can we accomplish with a countertop compost pail? Right now it smells horrendous and is filled with mold.