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While a sizable percentage of UK consumers say they are ready to use their smartphones as mobile wallets to make payments at the physical point of sale–especially if they receive incentives and security assurances–mobile wallets are unlikely to take off in 2013, according to UK-based market research firm ICM Research.

The firm, which surveyed 2,015 consumers in the UK online during the Christmas shopping season, found that a little more than a third, 34%, of consumers said they would definitely or probably use their mobile phones as a wallet to make payments, collect coupons or store event and transit tickets. And this figure rises to 46% when the firm screened for just smartphone owners.

The percentage of likely users increases further, to slightly more than half, or 51%, if incentives, such as discounts, are offered or security concerns are addressed, according to ICM.

Younger users also said they are more likely to use their phones as wallets, with 55% of respondents 18 to 24 and 49% of the 25-to-34 age group saying they would likely use their smartphones as wallets.

Despite the apparent willingness of consumers, however, the firm doesn’t believe mobile payments will happen in any big way this year. The research appeared to be mainly focused on the physical point of sale with contactless-mobile payments.

UPDATE: Jamie Belnikoff, Associate Director of ICM research, described it as a “slow burn.” END UPDATE.

For one thing, contactless payment, considered the entry point for mobile wallets, is “still very much in its infancy,” ICM said.

The survey, carried out online from Nov. 30 to Dec. 2, found that while 80% of respondents had heard of contactless payment and 25% of people in the UK have contactless bank payment cards, only 8% actually use contactless payment, and fewer than half of those make a contactless transaction at least weekly.

Also, despite the high awareness, many consumers said that they had concerns about the security of mobile wallets, mostly focused on the possibility of theft in the event of the loss of their devices.

And despite the one step, tap-and-go image of contactless payment, ICM found that many consumers were willing to accept additional security measures for mobile payment, including extra steps to complete the payment.

For example, 56% would have more confidence if banks or mobile operators guaranteed any financial losses, as banks do with cards; 43% would be willing to enter an extra PIN code for each transaction and 37% said they favored entering PINs after a certain number of transactions. Also, 40% said they would want their mobile phones to have the capability to be shut down remotely, and 34% would be ready for a daily cap on spending.

Some respondents even favor more sophisticated security measures, with 33% supporting facial recognition and 24% voice recognition.

There is also a barrier to use of NFC-enabled mobile wallets because while availability of NFC phones is increasing, “there simply aren’t enough NFC-enabled smartphones, which means many people can’t yet make contactless payments by mobile even if they wanted to,” said the firm.

“A major barrier to take up in 2013 is that smartphone users tend to be tied into long contracts, and people won’t break their contracts just to get an NFC enabled device,” it said.

Globally, there were about 100 million NFC-enabled phones shipped in 2013 and that figure is expected to roughly triple this year, said analysts.

On the acceptance side, of the 8% who use contactless payments, nearly a third said that they would use the technology more often if more contactless terminals were available. Although the UK was projected to have more than 150,000 such terminals in retail stores by the end of 2012, the highest number in Europe, ICM said that is not enough to support a major takeoff of mobile payment.

UPDATE: “An increasing number of mainstream brands are accepting contactless payments, however we found in our research that a key challenge remains the retail barrier,” said Jamie Belnikoff, who led the research. “Not enough stores offer contactless payment and those that do aren’t really promoting it,” he told NFC Times. END UPDATE.

Another online survey of 2,001 UK consumers, from Nov. 16 to Nov. 18, accompanied by mystery shopper visits to 26 London stores, identified a lack of in-store promotion of contactless payment. The study also found that staff were frequently uninformed about contactless payment, unsure whether the stores accepted it, and unaware of minimum payment requirements or upper limits. 

“It’s all very well for banks, credit card companies, and technology companies to push contactless, but if retailers are not going to get behind it, it’s just not going to work,” said Richard Moller of ICM.

Overall, in order for these launches to take off with UK consumers, ICM Research said, card issuers and mobile operators must make consumers feel safe about carrying their wallets on their mobile phones, and retailers must install more contactless terminals, draw attention to them, and train staff to provide adequate support.

UK card issuers and mobile operators are beginning to push mobile payment at the physical point of sale, with a handful of commercial launches expected later in 2013. Vodafone UK is expected to introduce a payment application supporting Visa payWave, and O2 UK may launch its NFC-enabled O2 Money application after missing its previous 2012 deadline.

Orange UK and issuer Barclaycard have said they still plan to expand the Quick Tap service launched in May 2011, though by the end of 2012, the service remained small. ICM's Research called the service innovative, but told NFC Times, “I feel that the market wasn’t quite ready for Quick Tap to take off–with retailers lagging behind.”

O2 UK, Everything Everywhere (the parent company of Orange UK) and Vodafone UK recently launched a joint venture called Weve, aimed at building a standard platform for mobile payments, offers, loyalty, and advertising. The venture may initiate commercial launches later this year. “The O2 Wallet is helping prepare the ground for NFC,” Belnikoff said.

Meanwhile, Barclaycard had distributed more than 600,000 of its NFC-enabled PayTag stickers for users to attach to their non-NFC-enabled phones as of the end of 2012.