Westpac will have to pay nearly three million dollars after settling with the Commerce Commission over rural swap rates.

A total of $2.47 million will go to customers who laid complaints and the commission says the bank will also pay $500,000 in costs - half of it to the Commission and the other $250,000 to Rural Support Trusts.

This follows an investigation into the way the bank marketed, promoted and sold interest rate swaps to its rural customers between 2005 and 2012.

Westpac's not admitting fault and the commission says its opinion that its actions breached the Fair Trading Act hasn't been tested in court.

The Commerce Commission believes Westpac’s behaviour gave some rural customers the impression that margins on interest rate swaps loans would not change during the life of the loan or on restructure.

However, under Westpac’s contractual terms the bank could, and in some instances did, increase margins.