A major American private equity firm is set to acquire a leading payment processing company in Canada, responsible for about one-third of all payment transactions in the country. The Royal Bank of Canada and Bank of Montreal disclosed their plans to sell Moneris, a prominent commerce solutions provider, to Francisco Partners for $2 billion. Following the announcement, both RBC and BMO experienced a positive surge in their stock prices, with RBC anticipating a gain of approximately $475 million post-tax from the transaction, and BMO expecting $600 million.
Despite the initial benefits for the banks, concerns have been raised by industry analysts regarding the potential negative impact on Canada’s digital sovereignty amid the ongoing trade tensions with the U.S. The concept of digital sovereignty pertains to a nation’s ability to maintain control over its digital assets. In a recent statement, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy free from external influence.
In a joint letter to Prime Minister Mark Carney, numerous experts stressed the importance of safeguarding Canada’s digital sovereignty amidst the changing ownership of Moneris. Sharon Polsky, President of the Privacy and Access Council of Canada, echoed these sentiments, emphasizing the significance of protecting Canadians’ data from potential foreign access, including law enforcement agencies. The acquisition of Moneris, which services over 325,000 commerce points and processes billions of transactions annually, raises concerns about the exposure of Canadians’ data to external entities.
The transaction has elicited fears that valuable transaction data could be exploited as leverage in trade negotiations between Canada and the U.S., especially considering the current trade disputes. Colin Deacon, an Independent Canadian senator, expressed apprehension over the potential misuse of Canadians’ data by the U.S. government, highlighting the risks associated with data sharing between countries. Both BMO and RBC refrained from elaborating further on the deal beyond their initial press releases, emphasizing Moneris’ continued commitment to serving Canadian businesses under its new ownership.
While Canada has taken steps to enhance digital privacy legislation, Polsky warned that the existing laws are insufficient to guarantee data protection in scenarios where Canadian companies are compelled to comply with foreign regulations. The introduction of Bill C-36, the Protecting Privacy and Consumer Data Act, aims to revamp Canada’s private sector privacy framework by emphasizing privacy as a fundamental right and implementing stricter data transfer protocols. Despite these efforts, Polsky criticized the legislation for not adequately addressing data retention within Canada for national security reasons.
The sale of Moneris is subject to regulatory approvals, including clearance under the Competition Act, and is anticipated to conclude by the end of the banks’ fiscal first quarter in 2027. As the ownership of such a critical payment processor transitions to an American entity, concerns persist about the implications for Canada’s digital sovereignty and the protection of citizens’ data.