Deutsche Bank, Commerzbank, BNP Paribas and Société Générale are among the firms participating in the initiative, are in talks with the European Commission (EC) about the plan, according to a report by the Financial Times.

However the banks want more "regulatory clarity" on interchange fees before proceeding, says the report.

The FT report, which cites "a person familiar with the plan" says the EC would need to accept an "appropriate level" of interchange fees before the banks would invest in the scheme and may prefer, in the end, to continue to use the Visa and MasterCard networks if no "clear solution" is provided by the regulator.

A report on the move by German financial daily newspaper Boersen-Zeitung, which quotes bank sources, says the proposed credit card scheme is expected to be based on the same interchange model as the Visa and MasterCard networks in Europe.

The European Commission, the European Central Bank and national central banks must approve the initiative before banks in other European countries can join the initiative, says the Boersen-Zeitung article.

However regulators have not yet approved the new credit card scheme. Jonathan Todd, spokesperson for competition commissioner Neelie Kroes, told reporters the banks taking part in the scheme have contacted the commission on an informal basis, but no greenlight has been given.

News of the credit card initiative follows reports last year that a group of Europe's largest banks - including Société Générale, Deutsche Bank, Dresdner Bank, Commerzbank, Unicredito, ABN Amro, ING and Rabobank - were holding discussions to establish a Europe-wide debit card scheme that would compete with MasterCard and Visa.

Banking consultancy Lafferty Group said the group of banks was unhappy with the possible emergence of MasterCard's Maestro as the dominant provider of debit card network services in Europe following the introduction of the single euro payments area (Sepa) in 2008.

The dominance of Maestro in Europe was also cited as a concern by the European Central Bank which last year called on the banking industry to set up a rival debit card scheme.

In a report on the delivery of the Sepa project, the ECB governing council said it "strongly recommends" setting up at least one additional European debit card scheme to challenge the hegemony of MasterCard. The central bank said a new scheme could enhance competition between card schemes, between processors and between banks.

The ECB report also called on the EC's competition directorate to reach a decision on the setting of interchange fees.

The EC ruled in December that the multilateral interchange fees (MIF) charged for cross-border transactions made with MasterCard and Maestro debit and credit cards violated EC Treaty regulations.

MasterCard was given six months to comply with an order to withdraw the fees or incur daily penalty payments of 3.5% of its daily global turnover in the preceding business year. The US card firm lodged an appeal against the ruling last month.

The EC has also launched a new investigation into the interchange fees charged by Visa for cross-border card transactions. The latest probe follows the expiry of a 2002 antitrust agreement between the card company and the EU's Competition Commission when Visa agreed to reduce levels of interchange fees for processing card transactions in return for immunity from legal action.