Australia Post said it was "experiencing software issues in retail and urgently seeking a fix" while Woolworths clarified on Twitter it was "continuing to trade as our stores can still process payments manually".

Westpac, Commonwealth Bank and ANZ apologised to customers inconvenienced throughout the afternoon.

“The cause of the problem is under urgent investigation and we are working to have full services restored as a matter of priority,” the Commonwealth Bank said in a statement.

Westpac said its teams were working on the issue. "We're aware some branches, ATMs & services in Sydney metro are non-operational due to a broader network failure in the region," the bank tweeted.

Website Down Detector, which detects when technology fails in real time, showed significant blackspots in capital cities for Telstra, Commonwealth Bank, Bendigo Bank, NAB, ANZ and Westpac.

Services beginning to come back

Just before 7pm the telco said most services were back online, four hours after the first issues were reported.

"We’re working with our enterprise partners on the remaining few," they said. "We're continuing to keep an eye on all services as this happens."

Caltex also clarified just before 7pm it was in the clear.

"Due to a widespread Telstra outage real time payments were interrupted over the last few hours along with some of our phone services," Caltex said. "All systems have now resumed normal service."

About 6pm, Woolworths had said they had been advised by Telstra its network connection was back up and running and expected checkout services to return to normal within the hour.

Trains and ambulance also affected

The outage extended beyond electronic transfers and ATMs, with Sydney Trains tweeting that its real-time trip data was down for about an hour.

A spokesperson confirmed this was because of the same Telstra issue but said no other part of the network was affected.

NSW Ambulance also reported technical difficulties since just before 3pm.

"A preliminary review indicates the issue is linked to a national Telstra outage," a spokesperson said.

"NSW Ambulance and E-Health are working with Telstra to manage and resolve the issue. NSW Ambulance is continuing to receive Triple Zero (000) calls and respond to medical emergencies and there have been no interruptions to the delivery of emergency services."