A major American private equity firm is set to acquire a leading payment processing company responsible for around one-third of all payment transactions in Canada. The Royal Bank of Canada and Bank of Montreal recently announced the sale of Moneris, a prominent commerce solutions provider in Canada, to Francisco Partners for $2 billion. Following the announcement, both RBC and BMO experienced a surge in their stock prices, with RBC anticipating a post-tax gain of approximately $475 million and BMO expecting around $600 million.
Despite the positive financial impact on the banks, there are concerns raised by industry analysts regarding the potential negative implications on Canada’s digital sovereignty, particularly in light of 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 September, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy free from external influence.
In the same month, a group of experts and academics penned an open letter urging Prime Minister Mark Carney to safeguard Canada’s digital sovereignty amidst the uncertainties posed by the U.S. administration. Sharon Polsky, president of the Privacy and Access Council of Canada, expressed apprehension over the deal, highlighting the risks of Canadian data being accessible to foreign governments and law enforcement agencies.
Moneris, which caters to thousands of businesses in Canada and processes over five billion transactions annually, plays a significant role in the country’s commercial landscape. Polsky warned that Canadians’ data could potentially be shared with foreign entities, raising concerns about privacy and data security.
The timing of the acquisition amid trade tensions between Canada and the U.S. fuels worries about the potential exploitation of transaction data for trade negotiations. Polsky and Independent Canadian senator Colin Deacon emphasized the risks associated with the U.S. government leveraging Canadians’ data for various purposes.
Both RBC and BMO refrained from further comments beyond the press releases announcing the deal, emphasizing continuity in Moneris’s commitment to Canadian businesses. Polsky underscored the inadequacy of current privacy legislation in protecting digital privacy rights, stressing the need for stronger measures to safeguard Canadian data.
The Canadian government’s introduction of Bill C-36, the Protecting Privacy and Consumer Data Act, represents an effort to modernize privacy regulations and enhance data protection. However, Polsky criticized the bill for not adequately addressing the retention of data within Canada for national security and data sovereignty purposes. The legislation is still undergoing the legislative process and requires regulatory approvals before the Moneris acquisition can be finalized.