Earlier this year the EC backed down from a threat to abolish interchange entirely but competition commissioner Neelie Kroes stated her determination to stamp down on "unjustifiably high" charges.

But according to a Reuters report, the final decision - which has been expected for some months - has been delayed by an internal "spat" and a ruling may not be made until the end of the year, or even 2008.

Xavier Durieu, secretary general of retail association EuroCommerce, told reporters that there are "internal diverging views" within the EC and the resistance seems to be coming from the EC's internal-market division.

It is thought that Kroes wants to introduce an 'at par' fee system, which would see retailers only paying for transaction processing and extras such as charges for free credit and fraud insurance, which interchange fees currently contain.

Durieu says the switch to an 'on par' system that would save European retailers around EUR10 billion on MasterCard fees alone.

But EU internal market commissioner Charlie McCreevy is reported to be against the change and is concerned that it would delay the launch of Sepa, which is expected to kick off in January 2008.

Earlier this year MasterCard itself warned that the EC's actions over interchange fees could could deter "investment in Sepa initiatives". MasterCard said that banks may may not be inclined to invest in Sepa while the EC debates what to do with interchange fees.

In July the European Central Bank (ECB) also called on the EC to reach a decision on interchange fees. In its progress report on the delivery of the Sepa project the ECB called on the banking industry to set up a rival debit card scheme to challenge the dominance of Maestro in Sepa, but warned that the current uncertainty in the market surrounding interchange fees was "hampering the transformation of existing domestic schemes and the start of potential new schemes offering a European alternative".