While the Commission is holding to the original timetable, it says that under its proposals businesses will have an extra grace period of six months to prepare their systems for accepting Sepa credit and debit transfers before legacy payment instruments are blocked.

Internal market and services commissioner Michel Barnier says: "As of today, migration rates for credit transfers and direct debits are not high enough to ensure a smooth transition to Sepa.

"I have warned many times that migration was happening too slowly and call once more on Member States to fully assume their responsibilities and accelerate and intensify efforts to migrate to Sepa. The transition period will not be extended after 1 August."

Although migration rates have been growing over the last few months to reach 64.1% for SCT and 26% for SDD in November, it is now "highly unlikely" that the target of 100% for SCT and SDD can be reached by 1 February 2014, says Barnier.

He says failure to take action could results in serious disruption to payment processing across the currency union and negative consequences for individual consumers and SMEs in particular who could have their payments (incoming or outgoing) blocked.

Taking into account the urgency of the situation, the Commission is urging legislative bodies to rapidly take up and agree the extended timeframe so as to ensure legal clarity for all stakeholders.

The Commission has also called upon Member States to ensure that, should the proposal still be in process of adoption on 1 February 2014, banks and payment services providers will not be penalised for continuing to process legacy payments in parallel with Sepa payments.

Barniers views on migration rates are not shared by all market participants, however, who point out that the numbers quoted for SCT and SDD are based on figures from November and may not reflect more positive recent data.

A Eurosystem source tells Finextra: "This is just a proposal, it is not a done deal - it has to be approved by both the European Council and European parliament."

In a formal statement, the EU monetary authority says: "The most recent information from national Sepa communities suggests that the pace of migration is high and accelerating, and the vast majority of stakeholders will complete their migration on time.

"The Eurosystem therefore stresses that the Sepa migration end date of 1 February 2014 remains and urges all market participants to complete the transition of all credit transfer and direct debit transactions to the Sepa standards by this date."