A major American private equity firm is set to acquire a prominent payment processing company responsible for a significant portion of payment transactions in Canada. The Royal Bank of Canada and Bank of Montreal have disclosed plans to sell their jointly owned Moneris to Francisco Partners for $2 billion. Following the announcement, both RBC and BMO experienced a boost in their stock prices. RBC anticipates netting around $475 million post-tax from the transaction, while BMO expects to gain $600 million.
Nevertheless, concerns have been raised by some industry experts regarding potential negative impacts on Canada’s digital sovereignty amidst the ongoing trade tensions with the U.S. Digital sovereignty broadly refers to a country’s ability to maintain control over its digital assets. In a recent statement, AI Minister Evan Solomon emphasized the need for Canada to establish a sovereign digital economy free from external influence.
In the same context, a group of experts and academics penned an open letter urging Prime Minister Mark Carney to defend Canada’s digital sovereignty to safeguard against external pressures. Sharon Polsky, president of the Privacy and Access Council of Canada, echoed these sentiments, expressing worries about Canadians’ data privacy being compromised as a result of the Moneris deal.
Moneris, utilized by numerous businesses across Canada, processes over five billion transactions annually, indicating the vast scale of data involved. Polsky highlighted the potential risks of Canadian data being accessible to foreign entities, including law enforcement agencies. The scenario of U.S. border authorities scrutinizing an individual’s transaction history, possibly impacting their entry based on certain purchases, was also raised.
The timing of this acquisition amid trade disputes between the two countries further amplifies concerns about the potential exploitation of Canadians’ data in trade negotiations. Polsky and Independent Canadian Senator Colin Deacon voiced apprehensions about the implications of the deal, emphasizing the risks associated with the transfer of such vast amounts of data to the U.S. government.
Both RBC and BMO declined to provide additional comments beyond their initial press releases on the transaction, emphasizing the continuity of service to Canadian businesses under the new ownership. Polsky emphasized the inadequacy of Canada’s current privacy legislation to protect against potential data breaches or misuse resulting from such deals.
In efforts to address digital sovereignty concerns, the Canadian government introduced Bill C-36, aiming to enhance privacy regulations and establish privacy as a fundamental right. However, Polsky criticized these efforts as insufficient in addressing the core issues of data sovereignty and national security. Despite ongoing legislative efforts, the Moneris sale still requires regulatory approvals and is anticipated to conclude by the end of the banks’ fiscal first quarter in 2027. The situation underscores the need for Canada to fortify its data protection measures to navigate the evolving digital landscape effectively.
