Regulatory demands, customer sophistication and investment requirements are also adding to the pressure on the core payments franchise of commercial banks, says the report.

The BCG research forecasts that volumes of payments will continue to grow but the mix of instruments will change, and prices will continue to be under pressure. Banks in the $300bn revenue payments market risk losing out to two groups of new competitors in particular, namely online providers delivering person-to-person (P2P) payments to consumers on the one hand, and access device manufacturers and network providers (telcos) providing mobile payments platforms on the other.

The research assumes that Internet commerce will grow, be it through P2P transactions, m-commerce, or B2B exchanges. This will drive an increase in non-cash payments volumes which BCG forecast to reach 450bn by 2008, compared with 200bn in 1998.

The report presents four different scenarios, under which the identity of the winning providers, and the revenues available to different players, varies considerably. At the extreme, if the new players are really successful, banks could see as much as $150bn of revenue loss. By contrast, there could be $30bn plus of new revenue sources for banks.

Nick Viner, vice president of BCG and head of its global payments practice, says banks must leverage their historic position of trust and their strong customer relationships, and form partnerships which bring them the new skills to compete effectively in the e-commerce space.

"With revenues falling in the core payments business and margins under pressure, they must search for more profitable business in the wider transaction chain with services that will tie in their strong customer base," he adds.