A major American private equity firm is set to acquire a leading payment processing company in Canada that handles around one-third of the country’s payment transactions. The Royal Bank of Canada and Bank of Montreal revealed their decision to sell Moneris, a prominent commerce solutions provider in Canada, to Francisco Partners for a substantial $2 billion.
Following the announcement of the deal, both RBC and BMO witnessed a positive impact, with their shares experiencing a significant increase. RBC anticipates a post-tax gain of approximately $475 million from the sale, while BMO expects to gain around $600 million.
Despite the initial optimism surrounding the acquisition, some industry experts are voicing concerns about potential adverse effects on Canada’s digital sovereignty, particularly in light of the ongoing trade tensions between Canada and the U.S.
Digital sovereignty refers to a nation or individual’s ability to maintain control over their digital assets. In September, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy that is immune to external influences.
In the same month, a group of experts and academics penned an open letter urging Prime Minister Mark Carney to safeguard Canada’s digital sovereignty amid fears of potential exploitation by foreign entities. Sharon Polsky, President of the Privacy and Access Council of Canada, echoed these concerns, emphasizing the importance of protecting Canadians’ data from unauthorized access by foreign governments and law enforcement agencies.
Moneris, which serves thousands of businesses in Canada and processes over five billion transactions annually, could potentially expose Canadians’ data to foreign entities following the acquisition. Polsky highlighted scenarios where sensitive transaction data could be accessed by foreign authorities, raising privacy and security concerns for Canadian consumers.
The timing of the deal, coinciding with trade tensions between the two countries, further exacerbates fears of data exploitation for trade negotiation purposes. Polsky and Independent Canadian Senator Colin Deacon expressed apprehension over the potential misuse of Canadians’ data by the U.S. government, highlighting the risks associated with data sharing agreements.
Both BMO and RBC refrained from providing additional comments beyond their initial press releases regarding the transaction. Moneris reiterated its commitment to serving Canadian businesses despite the change in ownership.
In response to the evolving digital landscape, Canada introduced Bill C-36, the Protecting Privacy and Consumer Data Act, aimed at enhancing the country’s private sector privacy regulations. The bill proposes significant revisions to Canada’s privacy framework, emphasizing privacy as a fundamental right and introducing stricter requirements for data transfer outside the country.
However, critics like Polsky argue that existing legislative efforts fall short in addressing core issues related to data sovereignty and national security. While Bill C-36 marks the government’s latest attempt to modernize privacy laws, it still faces several legislative hurdles before enactment.
The completion of the Moneris sale is contingent upon regulatory approvals, including compliance with the Competition Act, and is expected to conclude by the end of the banks’ fiscal first quarter in 2027. Despite ongoing legislative efforts, concerns persist regarding Canada’s readiness to safeguard its digital sovereignty in an increasingly interconnected global economy.