A major payment processing company, responsible for 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 recently announced the sale of Moneris, a leading commerce solutions provider in Canada, to Francisco Partners for $2 billion. Following the announcement, both RBC and BMO experienced an increase in their stock prices. RBC anticipates a post-tax gain of approximately $475 million, while BMO expects around $600 million.
Despite the financial gains, concerns have been raised by industry analysts regarding the potential negative impact on Canada’s digital sovereignty, especially amid the ongoing trade tensions between Canada and the U.S. Digital sovereignty broadly refers to a country’s or individual’s ability to maintain control over their digital assets. In September, AI Minister Evan Solomon emphasized the need for Canada to establish a sovereign digital economy that is 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 against external pressures. Sharon Polsky, President of the Privacy and Access Council of Canada, expressed worries about the implications of the Moneris deal. She highlighted the potential risks of Canadian data being accessible to foreign governments and law enforcement agencies.
Moneris serves thousands of businesses in Canada, processing over five billion transactions annually. Polsky warned that the sale could lead to Canadians’ data being accessed by foreign entities, posing privacy concerns. The transaction could potentially allow foreign governments to leverage the vast amount of consumer data for trade negotiations.
The impending acquisition of Moneris by an American entity raises further apprehensions about data privacy and security. Colin Deacon, an Independent Canadian senator, expressed concerns about the potential exploitation of Canadians’ data by the U.S. government. Both BMO and RBC, the current owners of Moneris, refrained from providing additional comments on the deal.
Canada’s existing privacy legislation is deemed inadequate by Polsky, who emphasized the urgent need for stronger data protection measures. She highlighted the dilemma faced by Canadian companies when compelled to comply with foreign laws over domestic regulations. The Canadian government introduced Bill C-36, the Protecting Privacy and Consumer Data Act, to strengthen privacy rights and regulate data transfers outside of Canada.
However, Polsky criticized the bill for not adequately addressing data sovereignty concerns. She noted that previous attempts to update privacy laws have fallen short of ensuring data retention within Canada for national security reasons. Bill C-36 is currently undergoing the legislative process and is expected to face regulatory scrutiny before final approval.
The sale of Moneris is subject to regulatory approvals, including clearance under the Competition Act, and is anticipated to be finalized by the end of the banks’ fiscal first quarter in 2027. Despite government efforts to enhance digital privacy regulations, Canada still faces challenges in safeguarding its digital sovereignty effectively.
