Guides / Glossary / Replace by fee
Glossary

Replace by fee: when an unconfirmed payment can change

A way to replace an unconfirmed transaction with a new version that pays a higher fee.

Education only

Definition. A way to replace an unconfirmed transaction with a version that pays a higher fee.

How it works

Until a transaction is included in a block, it waits in the mempool of each node. Replace by fee lets the sender broadcast a new version that spends at least one of the same inputs and pays a higher fee. Nodes that accept the replacement drop the old version, and miners are more likely to include the new one because it pays more. BIP 125 described a way for a transaction to signal that it may be replaced. Node relay policies have changed since, and many nodes now accept replacements whether or not the original signalled, so the safe assumption is that any unconfirmed payment can be replaced.

A related technique, child pays for parent, lets the receiver speed up a stuck payment by spending its output in a new transaction with a high fee, which pays miners to include both.

Why it matters for a company

For the company paying, replace by fee is useful. If a payment was sent at too low a fee rate and is stuck, the signers can sign a replacement with a higher fee rather than wait. That needs the same approvals as the original, so the policy should cover it.

For the company being paid, it is a warning. An unconfirmed incoming payment is not final. The sender could replace it with a version that pays a different address, including their own. A company that releases goods or treats an invoice as settled before confirmation is taking a risk. Setting a minimum number of confirmations before a payment counts as received deals with this.

Example only, fictional. A company pays a contractor at a low fee rate on a quiet Sunday, but fees rise and the payment stalls. On Monday the two signers approve a replacement at a higher rate. The bookkeeper records only the confirmed version and its final fee.

Common mistakes

Sources

Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.

  1. Bitcoin BIPsBIP 125: Opt-in full replace-by-fee signalling
  2. Bitcoin OptechTopic: child pays for parent (CPFP)
  3. Bitcoin developer documentationP2P network guide: transaction relay and the memory pool
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