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 have revealed plans to sell their jointly owned Moneris to Francisco Partners for $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 net around $475 million after tax from the sale, while BMO anticipates $600 million.
Despite the financial gains, concerns have been raised by industry analysts regarding the potential negative implications on Canada’s digital sovereignty, especially in light of the ongoing trade tensions with the U.S.
Digital sovereignty pertains to a country’s or individual’s ability to maintain control over their digital assets. In September, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy that is not subject to external influences.
A group of experts and academics wrote an open letter urging Prime Minister Mark Carney to safeguard Canada’s digital sovereignty, emphasizing the importance of protecting citizens’ information. Sharon Polsky from the Privacy and Access Council of Canada echoed these concerns, highlighting the potential risks of Canadian data being accessed by foreign governments and law enforcement agencies.
Moneris services over 325,000 points of commerce and processes more than five billion transactions annually for thousands of businesses in Canada. Polsky warned that the acquisition could expose Canadians’ data to external entities, including foreign governments and law enforcement agencies.
The deal coincides with the ongoing trade tensions between Canada and the U.S., raising fears that the transaction data could be exploited for leverage in trade negotiations. Colin Deacon, an Independent Canadian senator, shared concerns about the U.S. government potentially accessing Canadians’ data.
Both BMO and RBC declined to provide additional comments beyond their press releases announcing the deal. Moneris stated that its commitment to serving Canadian businesses will remain unchanged under the new ownership.
Polsky emphasized the inadequacy of Canada’s privacy legislation and highlighted the potential consequences if a Canadian company is compelled to comply with U.S. data requests. She pointed out that current laws do not address data sovereignty adequately, despite recent legislative efforts.
The proposed legislation, Bill C-36, aims to revamp Canada’s private sector privacy framework by recognizing privacy as a fundamental right, among other provisions. Despite these steps, Polsky argued that the legislation falls short in addressing the core issues of data retention and national security.
The sale of Moneris is pending regulatory approvals, including clearance under the Competition Act, and is expected to be finalized by the end of the banks’ fiscal first quarter in 2027. Polsky expressed concerns about Canada lagging behind in protecting its digital sovereignty and emphasized the need for stronger measures to safeguard citizens’ data.