The keyboard can be used instead of the default keyboard in various apps like Facebook Messenger, WhatsApp, Snapchat and WeChat, the Australian Financial Review reported.
The bank is reported to have used the keyboard feature to appeal to a younger demographic which does most of its banking on mobile devices.
Based on technology from Israel-based PayKey, the keyboard allowed users to send money in message or to use cardless cash codes to withdraw money from ATMs.
The reasons for Apple's action were not forthcoming, with the report citing sources as saying that any security concerns had already been addressed.
Apple did not offer any comment when asked.
In March, the ACCC denied four Australian banks, including Westpac, permission to collectively bargain with Apple for the use of Apple Pay.
The banks had sought authorisation to bargain with Apple for access to the near-field communication controller in iPhones, and reasonable access terms to the App Store.
Such access would have allowed the four to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet, without using Apple Pay, according to the ACCC.