A major American private equity firm is set to acquire a payment processing company that handles about one-third of all payment transactions in Canada. The Royal Bank of Canada and Bank of Montreal revealed their plans to sell Moneris, a leading commerce solutions provider in Canada, to Francisco Partners for $2 billion.
Following the announcement, both RBC and BMO experienced a boost in their stock prices. RBC anticipates a post-tax gain of approximately $475 million from the transaction, while BMO expects around $600 million. Despite these positive outcomes, some industry experts are expressing concerns about the potential impact on Canada’s digital sovereignty amidst the ongoing trade tensions with the U.S.
Digital sovereignty broadly refers to a country’s or individual’s ability to maintain control over their digital assets. In September, AI Minister Evan Solomon emphasized the need for Canada to establish a sovereign digital economy free from external coercion. Numerous experts and academics penned an open letter urging Prime Minister Mark Carney to swiftly safeguard Canada’s digital sovereignty from external influence.
Sharon Polsky, the president of the Privacy and Access Council of Canada, echoed these sentiments, emphasizing the importance of protecting Canadians’ information. The acquisition of Moneris, a company that serves over 325,000 points of commerce and processes more than five billion transactions annually, raises concerns about potential access to Canadian data by foreign governments and law enforcement agencies.
The deal’s occurrence amid the Canada-U.S. trade dispute raises further apprehensions about the potential leverage of transaction data in trade negotiations. Colin Deacon, an Independent Canadian senator, highlighted the risks of U.S. government access to Canadians’ data and its implications for individual privacy.
Both BMO and RBC, in their respective press releases, emphasized that Moneris’ commitment to Canadian businesses will remain unchanged under Francisco Partners’ ownership. However, Polsky emphasized the need for stronger privacy legislation in Canada to protect digital privacy and sovereignty effectively.
The introduction of Bill C-36, the Protecting Privacy and Consumer Data Act, aims to overhaul Canada’s private sector privacy framework by establishing privacy as a fundamental right and imposing stricter regulations on data transfers. Despite these efforts, experts like Polsky believe that more comprehensive measures are needed to ensure data sovereignty and security in the digital age.
Regulatory approvals are still pending for the Moneris sale, including clearance under the Competition Act, with the transaction expected to close by the end of the banks’ fiscal first quarter in 2027. As Canada works towards strengthening its digital privacy laws, concerns persist about the country’s ability to maintain control over its digital assets and data privacy.