A leading payment processing company handling about one-third of all transactions in Canada is set to be acquired by an American private equity firm. The Royal Bank of Canada and Bank of Montreal disclosed the sale of Moneris, a major commerce solutions provider in Canada, to Francisco Partners for $2 billion. Following the announcement, both RBC and BMO witnessed a surge in their stock prices. RBC anticipates a post-tax gain of approximately $475 million from the transaction, while BMO expects around $600 million.
Despite the initial positive outcomes for the companies, concerns have been raised by industry analysts regarding potential negative impacts on Canada’s digital sovereignty amid the ongoing trade tensions with the U.S.
The concept of digital sovereignty involves the ability of a nation or individual to maintain authority over their digital assets. In a recent statement, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy that is independent from external pressures.
In a joint open letter addressed to Prime Minister Mark Carney, numerous experts urged swift action to safeguard Canada’s digital sovereignty and shield the country from external influences. Sharon Polsky, President of the Privacy and Access Council of Canada, echoed these sentiments, expressing worries over the implications of the Moneris deal on Canadians’ data security.
Moneris, serving over 325,000 commerce points and processing more than five billion transactions annually, caters to a vast number of businesses in Canada. Polsky cautioned that the sale could potentially expose Canadians’ data to foreign entities, including law enforcement agencies. She highlighted scenarios where U.S. border authorities might access individuals’ transaction records, raising privacy concerns.
The timing of the acquisition amidst trade tensions between Canada and the U.S. has further amplified fears about the potential misuse of transaction data for trade negotiations. Polsky and Independent Canadian Senator Colin Deacon both voiced apprehensions about the risks associated with the U.S. government’s access to Canadians’ data through the deal.
Both BMO and RBC refrained from additional comments beyond their press releases on the acquisition. Moneris affirmed its commitment to Canadian businesses amid the ownership transition.
Notably, Canada’s current privacy legislation has been deemed inadequate by Polsky, emphasizing the urgency for improved protection of digital privacy rights. She warned about the consequences if a Canadian-based company is compelled to comply with U.S. regulations due to the deal.
The Canadian government introduced Bill C-36, the Protecting Privacy and Consumer Data Act, to enhance the private sector’s privacy framework. The bill mandates companies to conduct privacy impact assessments before transferring personal data outside Canada. However, Polsky criticized the bill for not adequately addressing the retention of data within Canada for national security purposes.
While the Moneris sale is pending regulatory approvals, including under the Competition Act, it is expected to conclude by the end of the banks’ fiscal first quarter in 2027. Polsky expressed concerns about Canada being lagging in terms of digital privacy regulations despite efforts to update the laws.