Known as Westpac Keyboard, the feature was announced in March and let the bank's customers change the default keyboard in social messaging apps such as Facebook Messenger, WhatsApp, Twitter, and Snapchat, in order to make payments to friends, family, and businesses.
Apple wrote to Westpac last week to tell the bank that its three-month-old keyboard feature would no longer be allowed on iPhones, according to The Australian Financial Review. Staff were reportedly perplexed by Apple's generic explanation letter, which suggested that keyboards should not be able to send money, or that it may offend some users.
Westpac has written to its customers to let them know the keyboard app extension will be removed in July. The app extension was the first in the Asia Pacific region to enable payments, but Apple has previously approved similar apps from other institutions, including India's ICICI Bank and Spain's Banco Sabadell and CaixaBank.
The bank has not commented on the reasons behind Apple's decision, but sources told AFR that Westpac had already addressed security concerns initially raised by Apple and had the app approved from that perspective. The ACCC consumer watchdog has now said it will be "seeking a proper explanation" from Apple to make sure it is not an anti-competitive move.
Westpac was among a group of institutions alongside Commonwealth Bank of Australia, National Australia Bank and Bendigo and Adelaide Bank, which unsuccessfully asked the ACCC to allow them to collectively bargain with Apple over access to the iPhone's NFC chip to allow their own payments services to work alongside Apple Pay.
Apple is launching its own payments service that will work over the company's iMessage chat service in iOS 11, which is set to be released in the fall. The service will be available in the U.S. first but no date has been set for its arrival in Australia.