The EC says the original 2001 regulations need to be broadened in response to the rapid evolution of the EU payments market, notably the introduction of the single euro payments area (Sepa).

From November 2009 - pending European parliament and council agreement - cross-border direct debits in euros will cost the same as domestic payments. The principle already applies for credit transfers, ATM cash withdrawals and card payments.

"It is essential in an integrated payment market to ensure that payment users see no practical difference between domestic and cross-border transactions," says Charlie McCreevy, internal market commissioner, EU. "This new proposal is a natural complement to the progressive creation of a single euro payment area, which should provide significant savings and benefits to European consumers and businesses."

The new EC proposal also provides for the establishment of out-of-court redress bodies for solving disputes related to cross-border payments, to improve customer protection.

In addition, some reporting obligations relating to balance of payments will be phased out to reduce administrative and financial burdens and help the implementation of Sepa.

The new proposals come after a report in February which was the culmination of a review begun in 2005.

Last month the EC and European Central Bank (ECB) calling on banks to push ahead with plans to introduce a pan-European direct debit payments system, even if interchange fees are initially charged for cross-border transactions.

The EC and ECB said they had indicated to the European Payments Council (EPC) that they would be prepared to support the idea of a multilateral interchange fee on condition that the charges were "objectively justified and transitional".

Europe's banks missed the first Sepa deadline for direct debits due in part to delays in passing a new Payment Services Directive (PSD). ECB executive board member Gertrude Tumpel-Gugerell has said it would "not be acceptable that bankers are not able to deliver the Sepa direct debits by a November 2009 deadline.

Read the EC's proposal for direct debits here