We have proposed a theoretical model to study bistable switching between two optical signals using a vertical cavity semiconductor saturable absorber (VCSSA) operating in reflection mode. The model is based on the carrier rate equation, which predicts cross-absorption phenomena within the absorber region. Simulations are carried out to investigate the effect of various cavity parameters on switching performance of the device. As an application, we have studied wavelength conversion of a 10Gb/s non-return-to-zero data signal, using the same model for bistable switching.