"But it was not until we went down and understood how easy it is to pay someone back for that coffee that we truly understood the friction that exists."
He said they found stories of people running coffee ledgers in their head because it was just too much effort to send the likes of $4 through a bank transfer.
The app, which is in the final stages of testing, works by linking up to your bank account.
It finds the contacts in your address book who also use Buck and shows you their handle and avatar meaning users don't have to enter in a 16-digit bank account number each time they want to pay someone.
"When it comes time to send someone money, all you need to do is look them up, and then enter an amount and a brief description of the payment.
"You can also request payment from someone or split a bill among a group of friends – perfect for dividing the cost of a meal on a night out."
Anyone can use the app, they don't need to bank with Westpac, and its use will be free for consumers.
Billinghurst said if the app got enough users it would look to commercialise it by selling it to businesses and merchants like restaurants for them to collect payments from their customers.
"Rather than those people huddling around the till at the end of the night the restaurant could then request that bill to the actual table and the table splits it. You can embed Buck into their point of sale."
The app uses the open banking rail network which would mean businesses could cut out the likes of Mastercard and Visa and their merchant service fees.
Billinghurst said the cash transfers would also be faster than the two days it can take for settlements from card payments meaning the money hits the business owner's account faster.
Users have to identify themselves through the sign-up process with Red Bird which is a registered anti-money laundering reporting entity which means it has to report any issues to the police.
"That is one of our biggest controls from an identity perspective to ensure that @lewis is actually me. We have got a regulatory obligation to do that."
And it will undertake constant penetration testing via another third party of the app itself and infrastructure that sits behind it to stop fraudulent transactions.
"We are very conscious that we are talking around payments, people's hard earned money and their data as well, so we have got an obligation as a business to look after that. We treat that very seriously."
The app is expected to be available for public use in September.