Banks cast doubt on EU's single euro payment plan

BRUSSELS, Sept 5 (Reuters) - Banks in the European Union doubted on Friday that the bloc's planned single payments system for millions of customers will be launched on time next year due to uncertainty over financing.

The European Savings Banks Group, which represents a third of Europe's retail banking market, said the EU's executive European Commission had forced the bloc's 8,000 banks to rethink how to offer customers pan-European direct debits.

The Commission believes a single euro payments system (SEPA) that replaced national systems will open up markets in goods and services and lower prices for consumers.

The Commission said on Thursday that banks could use a multilateral interchange fee structure for pan-EU direct debits -- but only for a short transition period.

"This position changes the payment landscape and forces banks to make the industrial decision to build a SEPA direct debit offer to thoroughly review their business case," the banking group said in a statement.

The November 2009 launch of pan-EU direct debits will now be dependent on the business calculations of hundreds of banks, the savings group said.

EU Competition Commissioner Neelie Kroes said on Thursday new pan-EU direct debit schemes should become new cash cows for banks.

The savings bank group said banks want to be certain they can make a return on investments.

"This objective becomes all the more pressing in the face of the Commission's campaign for free of charge services -- in effect levying indirect taxes on a segment of society," the banking group said.

EU Internal Market Commissioner Charlie McCreevy threatens to force banks to allow customers to switch their account to another bank free of charge unless the industry agrees to do this voluntarily.

Banks were already confused about how to fund pan-EU payment schemes after the Commission ruled last December that the multilateral interchange fee structure used by MasterCard (MA.N) violated EU competition rules and gave the company six months to come up with an alternative.

MasterCard is appealing the decision.

Banks want to see the outcome of this appeal, making Brussels and the European Central Bank anxious that the full introduction of SEPA and savings from phasing out national payment systems will be delayed by several years. (Reporting by Huw Jones, editing by Jason Neely)