Earlier this year the European Commission outlined plans for a potential formal proposal for a regulation establishing end dates for euro credit transfer schemes and euro direct debit schemes to comply with 'essential requirements'.

The EPC says it welcomes the possibility of legislation on migration end dates but has slammed large areas of the EC regulation plans.

Chief among these concerns is the possibility that any regulation might fail to establish definite end dates for the phasing out of existing national euro payment schemes. This would means that these existing schemes could become compliant with the 'essential requirements' handling domestic transactions while Sepa would be used exclusively for cross-border transactions in what is called 'Mini-Sepa'.

The EPC is also worried that regulation might allow for multiple competing and 'interoperable' euro credit transfer and direct debit schemes. This concept would do little to overcome the fragmentation of the euro payments market, says the council, which adds it does "not understand why the European Commission contemplates now a scenario so radically different from the approach it has promoted over the past decade".

Meanwhile, the regulation could render obsolete substantial investments made by early movers both on the demand and supply sides who - in response to previous calls by regulators including the EC - have already renewed their payment architecture to comply with the Sepa schemes.

Gerard Hartsink, chair, EPC, says: "In line with expectations expressed by the EU Finance Ministers, the European Parliament and the European Central Bank, the forthcoming Regulation must set end dates for the phasing out of existing national euro credit transfer and euro direct debit schemes to ensure that the high costs of running multiple payment schemes in parallel can be eliminated. A regulatory intervention based on the European Commission's considerations published in March and June 2010, would effectively derail the entire Sepa project and eliminate the extensive benefits Sepa offers bank customers."

However, Hartsink did welcome a move by the EC to hold a public hearing in November for consultation with market participants.

The EPC intervention comes on the day EU law establishes mandatory reachability of all banks in the euro area for cross-border direct debits. In practice, this means that any consumer who holds an account in the euro area, which provides the option to make direct debit payments at a national level, can now make cross-border transactions by SDD as well.