An American private equity firm is set to acquire Moneris, a prominent payment processing company in Canada responsible for around one-third of the country’s payment transactions. Royal Bank of Canada and Bank of Montreal have announced the sale of Moneris to Francisco Partners for $2 billion, resulting in a positive market response with both banks seeing an increase in their shares following the deal’s disclosure. RBC anticipates a post-tax gain of approximately $475 million, while BMO expects to gain $600 million from the transaction.
However, concerns have been raised by industry analysts regarding potential negative impacts on Canada’s digital sovereignty amidst the ongoing trade tensions with the United States.
Implications of the Deal
Digital sovereignty encompasses the ability of a country or individual to maintain control over their digital assets. In a recent statement, AI Minister Evan Solomon emphasized the importance of establishing a sovereign digital economy in Canada that is free from external pressure.
Several experts and academics penned an open letter urging Prime Minister Mark Carney to defend Canada’s digital sovereignty, emphasizing the need to shield the country from external influences. Sharon Polsky, President of the Privacy and Access Council of Canada, echoed these sentiments, expressing concerns over the potential exposure of Canadians’ data to foreign entities and law enforcement agencies.
Moneris serves a vast number of businesses in Canada, processing over five billion transactions annually for more than 325,000 points of commerce. Polsky highlighted the risk of Canadians’ data being accessible to foreign governments, raising scenarios such as U.S. border agents scrutinizing individuals’ transaction histories.
Data as a Negotiating Tool
Given the current trade war between Canada and the U.S., Polsky warned that the extensive data from Canadian transactions could be exploited to influence trade talks. Independent Canadian Senator Colin Deacon also expressed apprehensions about potential misuse of Canadians’ data by the U.S. government.
Both BMO and RBC declined to provide additional comments beyond their official press releases on the deal. Moneris assured that its commitment to serving Canadian businesses will remain unchanged under the ownership of Francisco Partners.
Legislative Measures
Polsky emphasized gaps in Canada’s digital privacy legislation and the potential risks associated with companies based in Canada being compelled to share data under external pressures. She pointed out the inadequacy of current laws in safeguarding data sovereignty.
The Canadian government introduced Bill C-36, the Protecting Privacy and Consumer Data Act, to enhance the country’s private sector privacy regulations and address privacy concerns. The bill aims to establish privacy rights as fundamental and includes provisions for privacy impact assessments before transferring personal data outside Canada.
Despite these efforts, Polsky criticized the legislation for not adequately addressing data retention within Canada as a matter of national security or data sovereignty. Bill C-36 represents the government’s third attempt to update privacy regulations and is currently in the legislative process.
The sale of Moneris is pending regulatory approvals, including clearance under the Competition Act, and is expected to conclude by the end of the banks’ fiscal first quarter in 2027.
Canada is facing challenges in asserting its data sovereignty, with Polsky emphasizing the need for stronger measures to protect Canadians’ digital assets.