A major American private equity firm is set to acquire a leading payment processing company responsible for about one-third of all payment transactions in Canada. The Royal Bank of Canada and Bank of Montreal revealed plans to sell their jointly owned firm, Moneris, to Francisco Partners for a hefty $2 billion. Following the announcement, both RBC and BMO experienced a positive market response, with their shares surging. RBC anticipates pocketing approximately $475 million post-tax, while BMO eyes a $600 million gain from the deal.
Although the sale has been profitable for the banks so far, concerns have been raised by industry analysts regarding potential adverse effects on Canada’s digital sovereignty amidst the ongoing trade tensions with the U.S.
Digital sovereignty broadly denotes a country’s or individual’s ability to maintain control over their digital assets. In a recent statement, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy that is immune to external influence.
Notably, a group of experts and academics issued an open letter to Prime Minister Mark Carney urging swift action to safeguard Canada’s digital sovereignty and shield the nation from external pressures. Sharon Polsky, President of the Privacy and Access Council of Canada, echoed these sentiments, highlighting the potential risks of sensitive Canadian data being exposed to foreign entities.
Moneris caters to thousands of businesses in Canada, managing over 325,000 points of commerce and processing more than five billion transactions annually. Polsky raised concerns about the possibility of Canadians’ data ending up in the hands of foreign governments and law enforcement agencies, citing scenarios such as U.S. border agents scrutinizing individuals’ purchase histories.
The ongoing trade dispute between Canada and the U.S. further exacerbates concerns over the Moneris deal. Polsky cautioned that the vast data derived from Canadian transactions could be exploited to influence trade negotiations, a sentiment shared by Independent Canadian Senator Colin Deacon.
Both BMO and RBC referred to their press releases regarding the transaction when approached for comments by CBC News. Moneris, in a separate statement, assured that its commitment to serving Canadian businesses would remain steadfast post-acquisition by Francisco Partners.
Polsky highlighted the inadequacy of current Canadian privacy legislation, emphasizing the potential repercussions of a Canadian company being compelled to disclose data under U.S. jurisdiction. She underscored the urgent need for stronger privacy protection laws in Canada, pointing out the introduction of Bill C-36, aimed at revamping the country’s private sector privacy framework.
Despite these legislative efforts, Polsky criticized the government’s approach, suggesting that current initiatives fall short of addressing fundamental issues related to data sovereignty and national security. Bill C-36 represents the government’s latest attempt to overhaul privacy regulations, following previous unsuccessful endeavors.
Regulatory approvals, including clearance under the Competition Act, are pending for the Moneris sale, expected to conclude by the end of the banks’ fiscal first quarter in 2027. Polsky expressed concerns about Canada’s standing in protecting digital sovereignty, emphasizing the need for stronger measures to safeguard national interests in the digital realm.