Setting a deadline for banks to complete the switch to a Single Euro Payment Area could "significantly boost" the project, European Union regulators said last week.

Banks have been hesitant to introduce and promote the system, known as Sepa, with only 4.4% of money transfers using the new format designed to streamline payments across the 16-nation euro region, the European Commission said.

The goal behind Sepa is to develop a cheaper, more efficient retail payments market. Bundesbank board member Hans Georg Fabritius said in July that banks could save hundreds of billions of euros by adopting Sepa.

Setting an end date to the Sepa changeover could "significantly boost" the Sepa migration process, the Brussels commission said while setting out other priorities for the next three years to make the system fully operational.

The move would help by "increasing current commitment and also reducing the costs of running duplicate payment systems during the migration period," the commission said. It said it will "examine various options" on the deadline.

Gerard Hartsink, chairman of the European Payments Council, the industry group that's designing Sepa, said the end of 2012, as recommended by the European Parliament would be a "good benchmark" deadline.

Sepa is also designed to streamline payments such as direct-debit payments, which consumers typically use to pay for recurring items such as rents, mortgages or telephone bills.

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