* Banks welcome latest move
* Retailers welcome cut-off date for fee structure
(Adds banks, retailer reaction)
By Huw Jones
LONDON, March 24 (Reuters) - Banks in the European Union can only use a certain type of fee on direct debit transactions until November 2012 even though it breaks EU anti-trust rules, the bloc's executive said on Tuesday.
Banks gave a provisional thumbs up to the news and retailers said a clear end-date for the fee system was long overdue.
The EU is adopting what is known as the Single Euro Payments Area, or SEPA project, to make it simple and cheap for consumers anywhere in the 27-nation bloc to authorise direct debits, credit transfers or use payment cards all from a single bank account.
The single SEPA system is due to replace a patchwork of national payments systems sometime around 2012. The aim is to boost competition in the range of services and goods people can buy and help increase growth.
However, rollout of the project has hit the buffers after there was confusion among banks over what sort of fee structure they can use for direct debits for paying recurring bills like gas, electricity or rent.
Uncertainty began with a Commission ruling in 2007 that MasterCard's multilateral interchange fee (MIF) was illegal.
MasterCard is challenging the ruling while rival Visa Europe is trying to renew its EU antitrust exemption to continue using a form of MIF.
The Commission then said in 2008 the MIF could only be used on an interim basis for SEPA schemes, but without saying how long interim meant in practice.
Banks said they could not invest millions of euros in new payment schemes amid such uncertainty over fee structures, raising fears the SEPA project would be derailed.
The Commission sought on Tuesday to lay down a clear timetable for using MIF on an interim basis as a key November deadline for launching SEPA-related direct debits looms.
"In particular, the Commission makes clear that a general per transaction multilateral interchange fee (MIF) for direct debit transactions does not seem justified for efficiency reasons and, therefore, does not appear compatible with EU antitrust rules," the executive said in a joint statement with the European Central Bank.
"After 1 November 2012, they should, therefore, have been replaced by other mechanisms, at the national level and at the cross-border level, for both SEPA direct debits and for national or legacy direct debits," the statement said.
The ECB said banks now had the clarity they needed.
"The launch of SEPA direct debit is vital for the success of SEPA," said ECB Executive Board Member, Gertrude Tumpel-Gugerell.
"We acknowledge that, after having provided clarity on the applicability of multilateral interchange fees during an interim period, this further clarifying position of the Commission now provides a clear scenario also for the long term," Tumpel-Gugerell said.
The European Payments Council, a banking body overseeing SEPA, said the statement appeared to give the necessary clarity for banks to launch two SEPA-compliant direct debit schemes.
"As chair, I am optimistic that the EPC plenary will support the launch of the two schemes," Gerard Hartsink told Reuters.
Meeting the November start date, however, will hinge on whether all EU states introduce SEPA rules on time.
EuroCommerce, a lobby representing reailers that has long campaigned to abolish MIF on any type of transaction, welcomed the 2012 end date which showed the EU has not "given in to blackmail by the banks".
"European retailers are now looking forward to a similar approach to MIF in card payments, especially on Visa debit and credit cards," EuroCommerce secretary general Xavier Durieu said in a statement. (Additional reporting by Marc Jones in Frankfurt; Editing by David Cowell)