diff --git a/.changelog/unreleased/improvements/ibc-relayer/4098-deserialize-ics20-v2-packet-data-with-protobuf.md b/.changelog/unreleased/improvements/ibc-relayer/4098-deserialize-ics20-v2-packet-data-with-protobuf.md
new file mode 100644
index 0000000000..96cc10baa8
--- /dev/null
+++ b/.changelog/unreleased/improvements/ibc-relayer/4098-deserialize-ics20-v2-packet-data-with-protobuf.md
@@ -0,0 +1,2 @@
+- Deserialize ICS20 v2 packet data using Protobuf instead of JSON
+  ([\#4098](https://github.com/informalsystems/hermes/issues/4098))
\ No newline at end of file
diff --git a/crates/relayer/src/link.rs b/crates/relayer/src/link.rs
index 3d87499480..e264a590e3 100644
--- a/crates/relayer/src/link.rs
+++ b/crates/relayer/src/link.rs
@@ -145,6 +145,21 @@ impl<ChainA: ChainHandle, ChainB: ChainHandle> Link<ChainA, ChainB> {
             ));
         }
 
+        // Query the channel if it exists in order to retrieve the channel version.
+        // If the channel doesn't exist or the query fails, set the version to None.
+        let maybe_channel_a = a_chain.query_channel(
+            QueryChannelRequest {
+                port_id: opts.src_port_id.clone(),
+                channel_id: opts.src_channel_id.clone(),
+                height: QueryHeight::Latest,
+            },
+            IncludeProof::Yes,
+        );
+        let channel_version = match maybe_channel_a {
+            Ok((channel_a, _)) => Some(channel_a.version),
+            Err(_) => None,
+        };
+
         let channel = Channel {
             ordering: a_channel.ordering,
             a_side: ChannelSide::new(
@@ -153,7 +168,7 @@ impl<ChainA: ChainHandle, ChainB: ChainHandle> Link<ChainA, ChainB> {
                 a_connection_id,
                 opts.src_port_id.clone(),
                 Some(opts.src_channel_id.clone()),
-                None,
+                channel_version.clone(),
             ),
             b_side: ChannelSide::new(
                 b_chain.clone(),
@@ -161,7 +176,7 @@ impl<ChainA: ChainHandle, ChainB: ChainHandle> Link<ChainA, ChainB> {
                 a_connection.counterparty().connection_id().unwrap().clone(),
                 a_channel.counterparty().port_id.clone(),
                 Some(b_channel_id.clone()),
-                None,
+                channel_version,
             ),
             connection_delay: a_connection.delay_period(),
         };
diff --git a/crates/relayer/src/link/relay_path.rs b/crates/relayer/src/link/relay_path.rs
index bb1d917540..02af243b21 100644
--- a/crates/relayer/src/link/relay_path.rs
+++ b/crates/relayer/src/link/relay_path.rs
@@ -2,13 +2,15 @@ use alloc::collections::BTreeMap as HashMap;
 use alloc::collections::VecDeque;
 use ibc_relayer_types::core::ics04_channel::packet::Sequence;
 use ibc_relayer_types::core::ics04_channel::version::Version;
+use prost::Message;
+use serde::de::Error as _;
 use serde_json::Error;
 use std::ops::Sub;
 use std::time::{Duration, Instant};
 
 use ibc_proto::google::protobuf::Any;
-use ibc_proto::ibc::applications::transfer::v2::FungibleTokenPacketData as RawPacketData;
-use ibc_proto::ibc::applications::transfer::v2::FungibleTokenPacketDataV2 as RawPacketDataV2;
+use ibc_proto::ibc::applications::transfer::v2::FungibleTokenPacketData;
+use ibc_proto::ibc::applications::transfer::v2::FungibleTokenPacketDataV2;
 use itertools::Itertools;
 use tracing::{debug, error, info, span, trace, warn, Level};
 
@@ -2020,12 +2022,12 @@ fn extract_memo_and_receiver(
     data: &[u8],
 ) -> Result<(String, String), Error> {
     if channel_version.is_ics20_v2() {
-        match serde_json::from_slice::<RawPacketDataV2>(data) {
+        match FungibleTokenPacketDataV2::decode(data) {
             Ok(packet_data) => Ok((packet_data.memo, packet_data.receiver)),
-            Err(e) => Err(e),
+            Err(e) => Err(Error::custom(e.to_string())),
         }
     } else {
-        match serde_json::from_slice::<RawPacketData>(data) {
+        match serde_json::from_slice::<FungibleTokenPacketData>(data) {
             Ok(packet_data) => Ok((packet_data.memo, packet_data.receiver)),
             Err(e) => Err(e),
         }
diff --git a/tools/integration-test/src/tests/ics20_filter/memo.rs b/tools/integration-test/src/tests/ics20_filter/memo.rs
index e46fad7ff0..f02da4bbf5 100644
--- a/tools/integration-test/src/tests/ics20_filter/memo.rs
+++ b/tools/integration-test/src/tests/ics20_filter/memo.rs
@@ -1,16 +1,26 @@
 use byte_unit::Byte;
 
-use ibc_relayer::config::types::ics20_field_size_limit::Ics20FieldSizeLimit;
+use ibc_relayer::{
+    channel::version::Version, config::types::ics20_field_size_limit::Ics20FieldSizeLimit,
+};
 use ibc_test_framework::prelude::*;
 
 #[test]
 fn test_memo_filter() -> Result<(), Error> {
-    run_binary_channel_test(&IbcMemoFilterTest)
+    run_binary_channel_test(&IbcMemoFilterTest { ics20_version: 1 })
+}
+
+#[cfg(any(doc, feature = "ics20-v2"))]
+#[test]
+fn test_memo_filter_ics20_v2() -> Result<(), Error> {
+    run_binary_channel_test(&IbcMemoFilterTest { ics20_version: 2 })
 }
 
 const MEMO_SIZE_LIMIT: usize = 2000;
 
-pub struct IbcMemoFilterTest;
+pub struct IbcMemoFilterTest {
+    pub ics20_version: u64,
+}
 
 impl TestOverrides for IbcMemoFilterTest {
     fn modify_relayer_config(&self, config: &mut Config) {
@@ -19,6 +29,10 @@ impl TestOverrides for IbcMemoFilterTest {
 
         config.mode.clients.misbehaviour = false;
     }
+
+    fn channel_version(&self) -> Version {
+        Version::ics20(self.ics20_version)
+    }
 }
 
 impl BinaryChannelTest for IbcMemoFilterTest {