diff --git a/.changelog/unreleased/testing/3626-ibc-replace-payment-address.md b/.changelog/unreleased/testing/3626-ibc-replace-payment-address.md
new file mode 100644
index 0000000000..ac5782198f
--- /dev/null
+++ b/.changelog/unreleased/testing/3626-ibc-replace-payment-address.md
@@ -0,0 +1,3 @@
+- Updated the gaia e2e tests to use the MASP internal address instead of
+  the payment address as the receiver of an IBC shielding transaction.
+  ([\#3626](https://github.com/anoma/namada/pull/3626))
\ No newline at end of file
diff --git a/crates/tests/src/e2e/ibc_tests.rs b/crates/tests/src/e2e/ibc_tests.rs
index aef4b65bd7..0c1abdac72 100644
--- a/crates/tests/src/e2e/ibc_tests.rs
+++ b/crates/tests/src/e2e/ibc_tests.rs
@@ -28,7 +28,7 @@ use namada_apps_lib::facade::tendermint::block::Header as TmHeader;
 use namada_apps_lib::facade::tendermint::merkle::proof::ProofOps as TmProof;
 use namada_apps_lib::facade::tendermint_rpc::{Client, HttpClient, Url};
 use namada_core::string_encoding::StringEncoded;
-use namada_sdk::address::{Address, InternalAddress};
+use namada_sdk::address::{Address, InternalAddress, MASP};
 use namada_sdk::events::extend::ReadFromEventAttributes;
 use namada_sdk::governance::cli::onchain::PgfFunding;
 use namada_sdk::governance::pgf::ADDRESS as PGF_ADDRESS;
@@ -73,6 +73,7 @@ use namada_sdk::ibc::storage::*;
 use namada_sdk::ibc::{event as ibc_events, COMMITMENT_PREFIX};
 use namada_sdk::key::PublicKey;
 use namada_sdk::masp::fs::FsShieldedUtils;
+use namada_sdk::masp::PaymentAddress;
 use namada_sdk::parameters::{storage as param_storage, EpochDuration};
 use namada_sdk::queries::RPC;
 use namada_sdk::state::ics23_specs::ibc_proof_specs;
@@ -2477,6 +2478,12 @@ fn transfer_from_gaia(
     let channel_id = channel_id.to_string();
     let amount = format!("{}{}", amount, token.as_ref());
     let rpc = format!("tcp://{GAIA_RPC}");
+    // If the receiver is a pyament address we want to mask it to the more
+    // general MASP internal address to improve on privacy
+    let receiver = match PaymentAddress::from_str(receiver.as_ref()) {
+        Ok(_) => MASP.to_string(),
+        Err(_) => receiver.as_ref().to_string(),
+    };
     let mut args = vec![
         "tx",
         "ibc-transfer",