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 recently revealed plans to sell Moneris, a key provider of commerce solutions in Canada, to Francisco Partners for $2 billion. This move has been received positively by both RBC and BMO, as their stock prices surged following the announcement. RBC anticipates a post-tax gain of approximately $475 million, while BMO expects to gain around $600 million from the sale.
Despite the initial optimism surrounding the deal, some industry experts are expressing concerns about its potential negative impact on Canada’s digital sovereignty, particularly in light of the ongoing trade tensions between Canada and the U.S. Digital sovereignty involves maintaining control over a country’s digital assets, free from external influence. In September, AI Minister Evan Solomon emphasized the importance of establishing a sovereign digital economy that is independent and secure.
In the same month, a group of experts and academics penned an open letter urging Prime Minister Mark Carney to defend Canada’s digital sovereignty amidst the changing landscape of international trade relations. Sharon Polsky, the president of the Privacy and Access Council of Canada, echoed these sentiments, emphasizing the significance of protecting Canadians’ data from external entities.
Moneris, which serves thousands of businesses in Canada and processes over five billion transactions annually, has a vast reach in the country’s commerce sector. The acquisition raises concerns about the potential exposure of Canadians’ data to foreign governments and law enforcement agencies, posing privacy and security risks. The deal’s timing amid trade tensions between Canada and the U.S. heightens worries about how transaction data could be exploited for leverage in trade negotiations.
Colin Deacon, an Independent Canadian senator, also voiced concerns about the implications of the deal on Canadians’ data privacy and security. Both BMO and RBC declined to provide further comments on the matter, citing the press releases related to the transaction.
Amidst these developments, the inadequacy of Canada’s current privacy legislation is a pressing issue. Polsky highlighted the urgent need for robust privacy laws to safeguard Canadians’ data sovereignty. The introduction of Bill C-36, the Protecting Privacy and Consumer Data Act, signifies a step towards enhancing Canada’s private sector privacy framework. However, experts like Polsky argue that more comprehensive measures are required to address data retention and sovereignty issues effectively.
The sale of Moneris is still subject to regulatory approvals, including clearance under the Competition Act, and is expected to conclude by the end of the fiscal first quarter of the banks in 2027. Nonetheless, the concerns raised by experts and officials indicate the challenges that Canada faces in safeguarding its digital sovereignty amidst evolving global dynamics.