A major American private equity firm is set to acquire a prominent Canadian payment processing company that handles approximately one-third of all transactions in the country. The Royal Bank of Canada and Bank of Montreal announced the joint sale of Moneris, a leading commerce solutions provider in Canada, to Francisco Partners for a hefty $2 billion. This move has already had a positive impact on both RBC and BMO, as their stock prices surged following the announcement. RBC expects to pocket around $475 million post-sale after tax, while BMO anticipates gains of $600 million.
Despite the initial optimism, some industry experts are expressing concerns about the potential adverse effects on Canada’s digital sovereignty, especially amidst the ongoing trade tensions with the U.S. Digital sovereignty broadly refers to a nation’s or individual’s ability to maintain control over their digital assets. In a statement earlier this year, AI Minister Evan Solomon stressed the importance of establishing a sovereign digital economy in Canada that is shielded from external influences.
In a related development, a group of experts and academics penned an open letter urging Prime Minister Mark Carney 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 risks of sensitive Canadian data falling into the hands of foreign governments or law enforcement agencies due to the Moneris deal.
The deal’s timing during the trade conflict between the two nations further exacerbates concerns regarding the potential misuse of Canadians’ transaction data in trade negotiations. Polsky and Independent Canadian Senator Colin Deacon both raised alarms about the implications of U.S. government access to Canadian data post-acquisition.
As the deal progresses, both BMO and RBC have chosen to remain tight-lipped beyond their initial press releases. Moneris has assured that its commitment to serving Canadian businesses will remain unwavering under the new ownership. Polsky emphasized the need for robust privacy legislation in Canada to protect citizens from potential data breaches or exploitation.
The Canadian government has taken steps towards enhancing digital privacy protection through the introduction of Bill C-36, the Protecting Privacy and Consumer Data Act. The bill aims to overhaul Canada’s private sector privacy regulations, emphasizing privacy as a fundamental right and introducing stricter rules for data handling by businesses. However, critics like Polsky believe that existing legislative efforts fall short of safeguarding data sovereignty adequately.
While Moneris’ sale is pending regulatory approvals under the Competition Act and is slated to conclude by the end of the banks’ fiscal first quarter in 2027, concerns linger about Canada’s preparedness in safeguarding its digital assets. Polsky emphasized that Canada still has ground to cover in fortifying its data sovereignty protections.
