The changes could help with economic recovery in the crisis-battered EU, by bringing in an estimated 130 billion euros (R1.8 trillion at R14.60/euro) over five years and helping to create 1.3 million jobs, according to the European Commission.
The Schengen area comprises 22 of the EU's 28 member states - Bulgaria, Croatia, Ireland, Cyprus, Romania and Britain are not included - as well as non-EU members Iceland, Liechtenstein, Norway and Switzerland.
"Europe needs a smarter visa policy," said EU Home Affairs Commissioner Cecilia Malmstrom.
"We need to attract more tourists, business people, researchers, students, artists and culture professionals to our shores."
At the same time, she sought to dispel EU fears about migrants unlawfully entering the bloc, by stressing that the regulations would preserve "a high level of security at our borders."
"Tourism is Europe's growth engine and has been the most important stronghold of European economy during the recent crisis," added EU Industry Commissioner Antonio Tajani.
The changes could lead to a 60% increase in visitors from six key countries - China, India, Russia, Saudi Arabia, South Africa and Ukraine - the commission said, after 6.6 million potential travellers from these markets had been put off in 2012 by cumbersome visa rules.
The measures include reducing visa processing times; simplifying application forms, including online procedures; removing the need to buy travel insurance; offering one-year visas to tour the bloc; and allowing EU embassies to handle requests on behalf of other member states.
The measures require the approval of EU member states and the European Parliament, which is not expected before 2015, the commission said. A total of 17.2 million people applied for Schengen visas in 2013, according to the commission, with the bulk coming from Russia.
That country alone accounted for more than 6 million visa applications in 2012.