A significant acquisition is on the horizon in the Canadian payment processing landscape as an American private equity firm is set to take ownership of a company responsible for a third of the payment transactions in Canada. The Royal Bank of Canada and Bank of Montreal have revealed plans to sell their jointly owned Moneris, a leading commerce solutions provider in Canada, to Francisco Partners for $2 billion. Following the announcement of this deal, both RBC and BMO have witnessed a positive impact on their shares, with RBC expecting to gain approximately $475 million post-taxes and BMO expecting $600 million.
Despite the initial optimism surrounding the deal, concerns have been raised by industry analysts about potential negative implications for Canada’s digital sovereignty, especially in light of the ongoing trade tensions with the U.S. Digital sovereignty broadly refers to a country’s ability to retain control over its digital assets. In a recent statement, AI Minister Evan Solomon emphasized the need for Canada to establish a sovereign digital economy that is free from external influence.
In a joint effort, a group of experts and academics penned an open letter urging Prime Minister Mark Carney to defend Canada’s digital sovereignty and shield the nation from external pressures. Sharon Polsky, President of the Privacy and Access Council of Canada, echoed these concerns, highlighting the implications of sensitive Canadian data being accessible to foreign entities, including law enforcement agencies.
The deal involving Moneris, which services over 325,000 points of commerce and processes more than five billion transactions annually, raises fears about potential privacy breaches and data sharing with foreign governments. The transaction could lead to scenarios where individuals’ transaction histories are scrutinized by foreign authorities, as exemplified by the possibility of U.S. border agents accessing personal purchase records.
Amidst the backdrop of a trade war between Canada and the U.S., concerns have been further heightened regarding the potential leveraging of Canadians’ transaction data for trade negotiations. The acquisition of Moneris by an American entity could provide rich data insights derived from Canadian transactions, raising apprehensions about the misuse of such information in trade talks.
Both Polsky and Independent Canadian Senator Colin Deacon have expressed apprehensions about the implications of the deal on data privacy and sovereignty. The lack of stringent privacy legislation in Canada could pose challenges in safeguarding Canadian data from external pressures. While steps have been taken to introduce new privacy legislation, such as Bill C-36, concerns persist about the adequacy of these measures in ensuring digital sovereignty and data protection.
The sale of Moneris is still subject to regulatory clearances, including approval under the Competition Act, and is projected to conclude by the end of the banks’ fiscal first quarter in 2027. Despite ongoing efforts to bolster privacy laws and safeguard digital sovereignty, Canada faces challenges in staying ahead in the evolving digital landscape, as reiterated by Polsky’s remark that the nation is still “behind the eight ball” and has a considerable distance to cover in strengthening its data protection framework.