The move means that, once the regulation comes into force, national credit transfers will be replaced by the pan European SEPA SCT within 12 months, with direct debits following after another year.
The proposal now goes to the European Parliament and the member states for consideration.
The EC says it has moved to enforce the move because self-regulation has failed. According to available European Central Bank data, as of October, only 9.6% of all credit transfers in the euro area were executed using a pan-European payment instrument. If this trend continues, it will take 25 years for the full benefits of the SEPA to be felt.
To ensure interoperability, the use of certain common standards and technical requirements such as the use of international bank account numbers (IBAN), bank identifier codes (BIC) and a financial services messaging standard (ISO 20022 XML) will be mandatory for all bank account payments in euro in the EU.
Internal market and services commissioner Michel Barnier says: "We have a Single Market, many countries share a single currency and soon we will move to a single pan-European payment system in Europe. It means that making payments cross-border will become as easy as making them at home. Consumers will only need one bank account and their payments will be faster, cheaper and safer. Businesses will benefit from one set of standards and much simpler processes. The proposal adopted today fixes end-dates to make this pan-European system a reality, hopefully as early as 2012."
The European Central Bank's Gertrude Tumpel-Gugerell - who has long called for a deadline - told the Financial Times that she "very much welcomed" the EC proposal.
Last month the European Payments Council warned that the EC will "effectively derail the entire SEPA project" if regulatory intervention on migration end dates does not include deadlines for phasing out national schemes.
