The competition watchdog has denied permission for three of the big four banks to collectively bargain with Apple over use of its electronic payment system.

Key points: CBA, NAB, Westpac and Bendigo and Adelaide Bank collective bargaining application rejected

CBA, NAB, Westpac and Bendigo and Adelaide Bank collective bargaining application rejected Banks say it will mean no competition against Apple for payments via iPhone

Banks say it will mean no competition against Apple for payments via iPhone ACCC said it was a "finely balanced decision", with final determination due in March

The Australian Competition and Consumer Commission has rejected an application by the Commonwealth Bank, Westpac, National Australia Bank and Bendigo and Adelaide Bank to collectively negotiate with Apple over use of its payment system, and potentially boycott it.

It means that customers of those banks will remain without access to touch-and-go payments on their iPhones until each bank reaches an agreement with Apple individually, unless the ACCC changes its mind in its final determination and a group deal is struck.

The banks are seeking an exemption from anti-cartel laws that would allow them to bargain as a group over use of Apple Pay.

Specifically, they wanted access to the "near-field communication" (NFC) controller within iPhones, reasonable access to the App Store for their digital wallets and the ability to negotiate around passing on the fees Apple charges for using the payment system to their customers.

The banks argued that lack of access to the NFC could stifle the development of "digital wallets" that might compete against Apple Pay.

"If the draft determination of the Australian competition regulator stands, effectively there will be no competition against Apple for mobile payments on the iPhone," said payments specialist and applicant bank spokesperson Lance Blockley.

"Many organisations supported our application with their own submissions, across major retailers, fintech companies and card schemes, and we encourage them to respond to the draft determination with further submissions during the consultation period."

However, the ACCC said NFC access is not necessary for digital wallets and the ACCC's chairman Rod Sims said the benefits of allowing the banks to negotiate as a group were uncertain.

"This is currently a finely balanced decision. The ACCC is not currently satisfied that the likely benefits from the proposed conduct outweigh the likely detriments," he noted in a statement.

The ACCC's ruling is a draft decision, with a final determination expected in March 2017, giving the banks a few months to convince the regulator to have a change of heart.

Apple in an emailed statement said it is focussed on offering the "easiest, most secure and private payment experience possible".

"We believe today's draft decision is great for Australians and we look forward to continuing to work with individual banks in Australia and around the world to bring Apple Pay to their customers," a spokesperson said, adding that the company has millions of Apple Pay users from 3,500 banks across 12 countries.

ANZ, American Express and Cuscal (which represents 31 smaller institutions) have reached separate agreements with Apple to use its payment system in Australia.