EU says single euro payments to start Feb 2014

BRUSSELS Dec 20 (Reuters) - A cheaper and seamless cross-border euro payments system for bank customers in the European Union will be in place within two years under a deal negotiated on Tuesday.

EU states and the European Parliament agreed on Tuesday that the new single euro payments area (SEPA) will be completed by the legally binding deadline of Feb. 1 2014 for banks to end national barriers for cashless euro payments.

A consumer will be able to use just one bank account to make and receive euro payments across the 27-country bloc without hidden national bank charges.

A customer will be able to pay bills in one country from an account in another.

"All account users stand to gain because international competition among service providers should drive down prices," parliament said in a statement.

The European Commission, which drafted the law, has said that SEPA could save up to 123 billion euros ($160 billion)within six years by tearing down national payment barriers and eliminating fees on cross-border direct debits from 2012.

SEPA has been devised in close cooperation with the European Payments Council, a banking industry body.

The 2014 deadline represents a four-year delay on the original plans due to late approval of enabling measures before fixing an end date for full migration from national systems to the SEPA framework.

The full European Parliament and Council of EU states will formally endorse Tuesday's deal.