The European Union has warned that it might be forced to intervene to increase competition in the credit card industry, which is currently dominated by US card heavyweights Visa and Mastercard.

Charlie McCreevy, the EU internal market commissioner, said that the EU would take action if competition abuse was discovered, following a close in the allegations against Mastercard whereby the firm were accused of damaging competition by setting minimum fees for banks to charge shops for using its cards. The European Commission is considering abolishing the fees.

Mr McCreevy is working closely with EU competition commissioner Neelie Kroes, as well as with other national authorities.

European central bank executive board member Gertrude Tumpel-Gugerell said that there should be more than two major pan-EU credit card operators.

The bloc plans to adopt a pan-EU system of payments so its 450 million consumers can use their credit and debit cards anywhere in the 25-country union.

The single euro payments area (SEPA) would allow people to make payments anywhere in the EU using one bank account, benefiting businesses in particular, by making it easier to send invoices and receive payments from customers across the EU.

The bloc’s 7,000 banks expect to introduce SEPA in January 2008, with the aim of replacing national payments systems from 2010.