The world's biggest company has come out swinging in its stoush with three of the big four banks over its cardless payments system, Apple Pay.

Commonwealth, Westpac and NAB, together with Bendigo and Adelaide Bank, want the Australian Competition and Consumer Commission to allow them to negotiate as one with Apple for access to Apple Pay.

In other words, to form a cartel.

They also want the ACCC to allow them to collectively boycott Apple, a move Apple describes as "hard core and pernicious".

ANZ broke away from the group and has signed up for Apple Pay, as has American Express, making them the only two companies in Australia to offer the phone-based payment system.

"Authorisation of a cartel amongst the applicant banks who control access to two-thirds of all cardholders in Australia would result in significant consumer harm and perpetuate the oligopolistic banking market conditions," Apple said in its 65-page submission to the ACCC.

"Apple Pay is an example of competition and innovation that the applicant banks evidently perceive (wrongly in Apple's view) as a threat.

"The proposed collective bargaining/boycott would slow innovation and reduce choices by protecting the applicant banks from competition with each other and from Apple for the next three years."

'Little incentive to innovate' if cartel approved

Apple went on to argue that approval for the banks to act as a cartel would result in poor outcomes for their customers.

"The applicant banks would have little incentive to compete amongst themselves to develop the best and most innovative presentment methods for their customers," the tech giant argued.

"Collectively negotiating will further entrench the applicant banks' position by ensuring that all of them can only advance in lockstep with the slowest, least willing member.

"The applicant banks would know that they can continue to hold out without the threat that one of their competitors will introduce Apple Pay for their customers, which could result in the loss of some customers who will switch banks in order to access Apple Pay."

Apple challenged the three major banks making the application to come up with evidence that it was in the interests of their customers and the economy.

"Apple does not believe that the applicant banks can substantiate with credible evidence, or even economic theory, any public benefits that they say could arise from the boycott," it concluded.

Apple threatens to bite into banks' oligopoly

The big banks are four of the five biggest companies in Australia and they are used to having things their own way.

But, in Apple, they are up against a monolith that dwarfs them in size.

Apple is dictating the terms of engagement and the banks do not like it, which is why they have asked the competition regulator for help.

A key bone of contention is the banks' desire to have access to the antenna in Apple devices which facilitate transactions.

Citing security concerns, Apple bluntly responded, "This is not open to negotiation with any bank."

Sorry, this video has expired Three of the big four banks cannot get a bite of Apple Pay ( Andrew Robertson )

The reality for the banks is that Apple is a major threat to their business models, despite Apple's view to the contrary.

All the banks are developing digital wallets, which Apple Pay could severely disrupt.

A bigger worry is that Apple Pay could be the first step in a wider push by Apple into the financial services sector, and other tech giants may follow.

In other words, the big banks could face genuine competition.

But the stakes are just as high for Apple.

If it gives ground in Australia, a relatively small market, it will be under enormous pressure in the really big markets (such as the US and Europe) to also give ground.

The competition regulator has rejected an application by the banks to let them act as a cartel with Apple on an interim basis while it works out its final position.

That decision is expected by the end of the year.