The Gemara tells that there were two Kohanim – Rabbi Tarfon and Rav Hisda – who had the practice of returning the money they received for Pidyon Ha’ben. This means that after the father gave them the money to fulfill the Misva, they would give the money back to the father. The Gemara adds that these sages were praised for following this practice.
On the basis of this discussion, the Shulhan Aruch rules (Yoreh De’a 305:8) that it is perfectly acceptable for a Kohen to return the money received for Pidyon Ha’ben to the father. However, the Shulhan Aruch adds that this may be done occasionally, but not all the time. If it becomes known that a certain Kohen always returns the money to the father, all fathers will choose that Kohen for Pidyon Ha’ben, thus depriving all other Kohanim the opportunity to receive the Pidyon Ha’ben payment. Therefore, a Kohen may return the money on occasion, but not every time he receives money for a Pidyon Ha’ben. An exception, though, is made in the case of a needy individual who performs a Pidyon Ha’ben. Whenever a Kohen receives Pidyon Ha’ben money from a poor person, he may return it, and he does not have to be concerned about creating a “monopoly” in his community. Since this is done for the benefit of the poor, it may be done whenever such a situation arises. The Aruch Ha’shulhan (Rav Yechiel Michel Epstein of Nevarduk, 1829-1908) adds that this must have been Rabbi Tarfon and Rav Hisda’s practice – to return the money if the father was poor. If the father was financially secure, then seemingly, there was no reason why these sages should be deserving of praise for returning the money. Undoubtedly, then, they returned the money specifically if the father was in a situation of need.
Therefore, although a Kohen should ensure not to always return the money received for Pidyon Ha’ben, he may return the money every time he receives it from a father who is poor.
A father may give the Kohen the coins for Pidyon Ha’ben as a “Matana Al Menat Le’hahazir” – a gift given on condition that it is returned. The Gemara in several contexts establishes that if a person gives something to somebody as a gift on condition that it is returned, the object is considered owned by the recipient until he returns it. Therefore, this may be done for Pidyon Ha’ben, since the Kohen is considered to have actually received the money until he returns out. However, the Shulhan Aruch notes that this, too, should not be done on a regular basis, in order not to “monopolize” Pidyon Ha’ben to the detriment of other Kohanim. Moreover, the Pit’heh Teshuba adds that a “Matana Al Menat Le’hahazir” is acceptable for Pidyon Ha’ben only if the condition is that the Kohen must return the exact same coins. If the arrangement allows the Kohen to pay the father other coins, then this transaction becomes a loan, not a gift given on condition of return. A loan does not suffice for the Misva of Pidyon Ha’ben, and therefore such an arrangement is not allowed.
Summary: A Kohen may return the money he receives for Pidyon Ha’ben, as long as this is done on occasion, and not every time he receives Pidyon Ha’ben money. However, whenever he is the Kohen for the Pidyon Ha’ben of a child from a needy family, he may return the money, and this is an admirable practice.