Three of the country's banking giants are joining forces to allow instant payments between people or to small businesses via a smart phone, with plans to ultimately roll out a cross-industry "digital wallet."

Commonwealth Bank, National Australia Bank and Westpac will by the end of this year launch a mobile app aimed at allowing payments such as splitting a restaurant bill, or paying a tradesperson.

The service, known as Beem, will be free and made available to any customer, irrespective of their bank, and it will be function on iPhones and Android phones.

The app will be the first service offered by a new digital payments joint venture that has been formed between CBA, NAB and Westpac. These are also the three major banks which have so far failed to reach a deal with Apple to provide its payment service, Apple Pay.