When are facilitation payments distinct from extortion?

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Facilitation payments are distinct from extortion based on the surrounding circumstances, even though the line is often blurred.

Facilitation payments are extra payments for services that should otherwise be offered free of charge or at low cost, and the distinction from extortion depends on the circumstances. Extortion involves demanding a bribe payment in exchange for a decision by a government institution that enables a service, licence, or approval that would be offered free of charge or at low cost, or demanding a bribe to avoid an undeserved disadvantage.
When the payment is framed as an informal “clearing price”
A facilitation payment can function as an informal price that clears the market, meaning it matches the supply of services to demand given users’ willingness to pay. This market-clearing role is contrasted with extortion, where the demand is tied to a coercive exchange for an official decision or to avoid an undeserved disadvantage.
When the exchange involves a government decision enabling a service or approval
Extortion is defined as a demand for a bribe payment in exchange for a decision by a government institution that makes possible a service, licence, or approval otherwise offered free of charge or at low cost. It can also cover demands for a bribe to avoid an undeserved disadvantage, such as paying a fine even if no offence has been committed.
Why unpredictability matters versus formal pricing
Compared with a formal price, facilitation payments usually cause distortions because their informal character makes the size of the price often unpredictable. The degree of distortions also depends on how substantial the additional costs are in most clients’ personal economy, which can affect how the informal payment operates in practice.
The line is blurred, but the context decides
The distinction between facilitation payments and extortion is described as blurred, but it turns on the circumstances of the payment request and the nature of the exchange. In other words, the same “extra payment” framing can fall on different sides depending on whether it operates like an informal market price or like a demand tied to an official decision or an undeserved disadvantage.

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When are facilitation payments distinct from extortion?

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