Two weeks ago AIB, Bank of Ireland, KBC Bank Ireland and Permanent TSB applied to the Competition and Consumer Protection Commission (CCPC) for permission to develop the Synch payments service.

However, this evening the CCPC said it had rejected the merger notification it had received for the joint venture as “invalid”.

It said the application had been submitted on a voluntary basis under the Competition Act and it had commenced a preliminary assessment to confirm the transaction was a merger or acquisition within the meaning of the law.

It also examined it to see whether full details had been provided as required.

“Following a preliminary review of the notification, the CCPC has formed the view that the notifying parties have not provided full details of the proposed transaction as required under section 18(3) of the 2002 Act,” the CCPC said.

“As the notifying parties have failed to provide full details in the notification in relation to the nature of the proposed transaction, the CCPC has been unable to determine whether the proposed transaction is a “merger or acquisition” within the meaning of section 16 of the 2002 Act.”

The competition watchdog also said that it had been able to determine whether the plan should have been notified to it on a mandatory basis.

As a result, it said it had rejected the application.

“The CCPC has written to the notifying parties informing them of its decision and expressed its willingness to further engage with the notifying parties in relation to the issues raised in its letter,” it said.

“We see this as a return of the application form,” said a spokesperson for the Banking and Payments Federation Ireland, which is coordinating the project.

“We welcome the CCPC’s statement of their willingness to engage with the parties involved in relation to the issues which they have raised and we look forward to engaging with them on all of the detail.”

The development is a setback for the project, dubbed Pegasus, which the banks had hoped could start rolling out from the summer.

It comes at a time when the main lenders are coming under increased pressure from digital banks and financial services providers.

If developed, the system would allow bank customers to transfer funds to each other using an app in much the same way as users of fintech services like Revolut and N26 can.