diff --git a/CHANGELOG.md b/CHANGELOG.md
index 94f55c8c26..285b7b4331 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,6 +7,7 @@
 * (testground)[1649](https://github.com/crypto-org-chain/cronos/pull/1649) Fix running single validator benchmark locally.
 * (cli)[#1647](https://github.com/crypto-org-chain/cronos/pull/1647) Fix node can't shutdown by signal.
 * (testground)[#1652](https://github.com/crypto-org-chain/cronos/pull/1652) Remove unexpected conflicts in benchmark transactions.
+* [#1654](https://github.com/crypto-org-chain/cronos/pull/1654) Set relayer as payee for relayer caller when enabled incentivized packet.
 
 ### Improvements
 
diff --git a/app/app.go b/app/app.go
index b8905c4170..7f94f3b790 100644
--- a/app/app.go
+++ b/app/app.go
@@ -131,6 +131,7 @@ import (
 	ibc "github.com/cosmos/ibc-go/v8/modules/core"
 	ibcclienttypes "github.com/cosmos/ibc-go/v8/modules/core/02-client/types"
 	ibcconnectiontypes "github.com/cosmos/ibc-go/v8/modules/core/03-connection/types"
+	ibcchanneltypes "github.com/cosmos/ibc-go/v8/modules/core/04-channel/types"
 	porttypes "github.com/cosmos/ibc-go/v8/modules/core/05-port/types"
 	ibcexported "github.com/cosmos/ibc-go/v8/modules/core/exported"
 	ibckeeper "github.com/cosmos/ibc-go/v8/modules/core/keeper"
@@ -280,6 +281,43 @@ var (
 
 type GenesisState = map[string]json.RawMessage
 
+type CustomIBCFeeMiddleware struct {
+	ibcfee.IBCMiddleware
+	keeper ibcfeekeeper.Keeper
+}
+
+func NewIBCFeeMiddleware(app porttypes.IBCModule, k ibcfeekeeper.Keeper) CustomIBCFeeMiddleware {
+	return CustomIBCFeeMiddleware{
+		IBCMiddleware: ibcfee.NewIBCMiddleware(app, k),
+		keeper:        k,
+	}
+}
+
+func (im CustomIBCFeeMiddleware) OnAcknowledgementPacket(
+	ctx sdk.Context,
+	packet ibcchanneltypes.Packet,
+	acknowledgement []byte,
+	relayer sdk.AccAddress,
+) error {
+	if im.keeper.IsFeeEnabled(ctx, packet.SourcePort, packet.SourceChannel) {
+		var ack ibcfeetypes.IncentivizedAcknowledgement
+		err := ibcfeetypes.ModuleCdc.UnmarshalJSON(acknowledgement, &ack)
+		if err != nil {
+			return errors.Wrapf(err, "cannot unmarshal ICS-29 incentivized packet acknowledgement: %v", ack)
+		}
+		im.keeper.SetPayeeAddress(ctx, relayer.String(), ack.ForwardRelayerAddress, packet.SourceChannel)
+	}
+	return im.IBCMiddleware.OnAcknowledgementPacket(ctx, packet, acknowledgement, relayer)
+}
+
+func (im CustomIBCFeeMiddleware) OnTimeoutPacket(
+	ctx sdk.Context,
+	packet ibcchanneltypes.Packet,
+	relayer sdk.AccAddress,
+) error {
+	return im.IBCMiddleware.OnTimeoutPacket(ctx, packet, relayer)
+}
+
 // App extends an ABCI application, but with most of its parameters exported.
 // They are exported for convenience in creating helper functions, as object
 // capabilities aren't needed for testing.
@@ -713,8 +751,8 @@ func New(
 
 	var transferStack porttypes.IBCModule
 	transferStack = transfer.NewIBCModule(app.TransferKeeper)
-	transferStack = middleware.NewIBCConversionModule(transferStack, app.CronosKeeper)
-	transferStack = ibcfee.NewIBCMiddleware(transferStack, app.IBCFeeKeeper)
+	transferStack = middleware.NewIBCConversionModule(transferStack, app.CronosKeeper, app.IBCFeeKeeper)
+	transferStack = NewIBCFeeMiddleware(transferStack, app.IBCFeeKeeper)
 
 	govKeeper := govkeeper.NewKeeper(
 		appCodec,
@@ -741,7 +779,7 @@ func New(
 
 	var icaControllerStack porttypes.IBCModule
 	icaControllerStack = icacontroller.NewIBCMiddleware(nil, app.ICAControllerKeeper)
-	icaControllerStack = ibcfee.NewIBCMiddleware(icaControllerStack, app.IBCFeeKeeper)
+	icaControllerStack = NewIBCFeeMiddleware(icaControllerStack, app.IBCFeeKeeper)
 	// Since the callbacks middleware itself is an ics4wrapper, it needs to be passed to the ica controller keeper
 	ics4Wrapper := icaControllerStack.(porttypes.Middleware)
 	app.ICAControllerKeeper.WithICS4Wrapper(ics4Wrapper)
@@ -750,7 +788,7 @@ func New(
 
 	var icaHostStack porttypes.IBCModule
 	icaHostStack = icahost.NewIBCModule(app.ICAHostKeeper)
-	icaHostStack = ibcfee.NewIBCMiddleware(icaHostStack, app.IBCFeeKeeper)
+	icaHostStack = NewIBCFeeMiddleware(icaHostStack, app.IBCFeeKeeper)
 
 	// Create static IBC router, add transfer route, then set and seal it
 	ibcRouter := porttypes.NewRouter()
diff --git a/integration_tests/cosmoscli.py b/integration_tests/cosmoscli.py
index 2ed8812414..4b6aca5746 100644
--- a/integration_tests/cosmoscli.py
+++ b/integration_tests/cosmoscli.py
@@ -601,9 +601,12 @@ def combine_batch_multisig_tx(
     def broadcast_tx(self, tx_file, **kwargs):
         kwargs.setdefault("broadcast_mode", "sync")
         kwargs.setdefault("output", "json")
-        return json.loads(
+        rsp = json.loads(
             self.raw("tx", "broadcast", tx_file, node=self.node_rpc, **kwargs)
         )
+        if rsp["code"] == 0:
+            rsp = self.event_query_tx_for(rsp["txhash"])
+        return rsp
 
     def broadcast_tx_json(self, tx, **kwargs):
         with tempfile.NamedTemporaryFile("w") as fp:
@@ -1612,10 +1615,7 @@ def register_counterparty_payee(
         return rsp
 
     def register_payee(self, port_id, channel_id, relayer, payee, **kwargs):
-        default_kwargs = {
-            "home": self.data_dir,
-        }
-        return json.loads(
+        rsp = json.loads(
             self.raw(
                 "tx",
                 "ibc-fee",
@@ -1625,14 +1625,15 @@ def register_payee(self, port_id, channel_id, relayer, payee, **kwargs):
                 relayer,
                 payee,
                 "-y",
-                **(default_kwargs | kwargs),
+                home=self.data_dir,
+                **kwargs,
             )
         )
+        if rsp["code"] == 0:
+            rsp = self.event_query_tx_for(rsp["txhash"])
+        return rsp
 
     def pay_packet_fee(self, port_id, channel_id, packet_seq, **kwargs):
-        default_kwargs = {
-            "home": self.data_dir,
-        }
         rsp = json.loads(
             self.raw(
                 "tx",
@@ -1642,7 +1643,8 @@ def pay_packet_fee(self, port_id, channel_id, packet_seq, **kwargs):
                 channel_id,
                 str(packet_seq),
                 "-y",
-                **(default_kwargs | kwargs),
+                home=self.data_dir,
+                **kwargs,
             )
         )
         if rsp["code"] == 0:
diff --git a/integration_tests/ibc_utils.py b/integration_tests/ibc_utils.py
index bd88269006..f8daa58dae 100644
--- a/integration_tests/ibc_utils.py
+++ b/integration_tests/ibc_utils.py
@@ -218,15 +218,22 @@ def prepare_network(
 
 
 def register_fee_payee(src_chain, dst_chain):
+    port_id = "transfer"
+    channel_id = "channel-0"
     rsp = dst_chain.register_counterparty_payee(
-        "transfer",
-        "channel-0",
+        port_id,
+        channel_id,
         dst_chain.address("relayer"),
         src_chain.address("signer1"),
         from_="relayer",
         fees="100000000basecro",
     )
     assert rsp["code"] == 0, rsp["raw_log"]
+    # relayer = src_chain.address("signer1")
+    # relayer_caller = eth_to_bech32(RELAYER_CALLER)
+    # rsp = src_chain.register_payee(
+    #     port_id, channel_id, relayer_caller, relayer, _from=relayer_caller
+    # )
 
 
 def assert_ready(ibc):
diff --git a/integration_tests/test_ibc_rly.py b/integration_tests/test_ibc_rly.py
index 22f69a7f2f..c36d675e04 100644
--- a/integration_tests/test_ibc_rly.py
+++ b/integration_tests/test_ibc_rly.py
@@ -7,7 +7,6 @@
 
 from .ibc_utils import (
     RATIO,
-    RELAYER_CALLER,
     assert_duplicate,
     cronos_transfer_source_tokens,
     cronos_transfer_source_tokens_with_proxy,
@@ -287,8 +286,8 @@ def test_ibc_incentivized_transfer(ibc):
         acknowledge_packet(seq0),
         distribute_fee(src_relayer, fee),
         *send_coins(feeibc_addr, src_relayer, src_amount, fee_denom),
-        distribute_fee(RELAYER_CALLER, fee),
-        *send_coins(feeibc_addr, RELAYER_CALLER, src_amount, fee_denom),
+        distribute_fee(src_relayer, fee),
+        *send_coins(feeibc_addr, src_relayer, src_amount, fee_denom),
         distribute_fee(cronos_signer2, ""),
         *send_coins(feeibc_addr, cronos_signer2, 0, fee_denom),
         fungible(checksum_dst_adr, cronos_signer2, amount, dst_denom),
diff --git a/x/cronos/middleware/conversion_middleware.go b/x/cronos/middleware/conversion_middleware.go
index 12dd7b23be..ba6c5d243a 100644
--- a/x/cronos/middleware/conversion_middleware.go
+++ b/x/cronos/middleware/conversion_middleware.go
@@ -6,6 +6,7 @@ import (
 	sdk "github.com/cosmos/cosmos-sdk/types"
 	sdkerrors "github.com/cosmos/cosmos-sdk/types/errors"
 	capabilitytypes "github.com/cosmos/ibc-go/modules/capability/types"
+	ibcfeekeeper "github.com/cosmos/ibc-go/v8/modules/apps/29-fee/keeper"
 	transferTypes "github.com/cosmos/ibc-go/v8/modules/apps/transfer/types"
 	channeltypes "github.com/cosmos/ibc-go/v8/modules/core/04-channel/types"
 	porttypes "github.com/cosmos/ibc-go/v8/modules/core/05-port/types"
@@ -19,13 +20,15 @@ var _ porttypes.UpgradableModule = (*IBCConversionModule)(nil)
 type IBCConversionModule struct {
 	app          porttypes.IBCModule
 	cronoskeeper cronoskeeper.Keeper
+	feekeeper    ibcfeekeeper.Keeper
 }
 
 // NewIBCConversionModule creates a new IBCModule given the keeper and underlying application
-func NewIBCConversionModule(app porttypes.IBCModule, ck cronoskeeper.Keeper) IBCConversionModule {
+func NewIBCConversionModule(app porttypes.IBCModule, ck cronoskeeper.Keeper, fk ibcfeekeeper.Keeper) IBCConversionModule {
 	return IBCConversionModule{
 		app:          app,
 		cronoskeeper: ck,
+		feekeeper:    fk,
 	}
 }