A prominent payment processing firm handling a significant portion of payment transactions in Canada is set to be acquired by a U.S.-based private equity entity. The Royal Bank of Canada and Bank of Montreal revealed their decision to sell their jointly owned Moneris company, a leading provider of commerce solutions in Canada, to Francisco Partners for $2 billion. Following the announcement, both RBC and BMO witnessed a positive surge in their share prices. RBC anticipates a post-tax gain of approximately $475 million from the transaction, while BMO expects to gain around $600 million.
Despite the favorable financial outcomes for the involved entities, some industry experts are expressing concerns about the potential adverse effects on Canada’s digital sovereignty in light of the ongoing trade tensions with the U.S. Digital sovereignty generally refers to a nation’s or individual’s ability to maintain control over their digital assets. In September, AI Minister Evan Solomon emphasized the necessity for Canada to establish a sovereign digital economy that is free from external influence.
In the same month, numerous experts and academics penned an open letter urging Prime Minister Mark Carney to safeguard Canada’s digital sovereignty amid the uncertainties stemming from the U.S. administration. Sharon Polsky, the president of the Privacy and Access Council of Canada, echoed these sentiments, emphasizing the need for Canadians to be vigilant as their data could potentially be accessed by foreign governments and law enforcement agencies.
Moneris serves thousands of businesses in Canada, managing over 325,000 points of commerce and processing more than five billion transactions annually. Polsky warned that the acquisition could expose Canadians’ data to foreign entities, potentially leading to scenarios like U.S. border authorities scrutinizing individuals’ transaction histories. The transaction’s occurrence during a trade dispute between the two countries has heightened concerns about the possible leveraging of transaction data for trade negotiations.
Colin Deacon, an Independent Canadian senator, also expressed apprehensions about the implications of the deal, particularly regarding the U.S. government’s potential access to Canadian data. Both BMO and RBC declined to offer additional comments beyond the press releases announcing the deal, emphasizing that Moneris’s commitment to serving Canadian businesses will continue under its new ownership.
The existing privacy legislation in Canada is deemed inadequate by Polsky, who highlighted the risks associated with a Canadian company being compelled to comply with U.S. laws. The government introduced Bill C-36, the Protecting Privacy and Consumer Data Act, as a step towards enhancing digital privacy protection. However, Polsky criticized the legislation for not adequately addressing data retention within Canada for reasons of national security and data sovereignty. Despite the ongoing legislative efforts, Canada still faces challenges in strengthening its digital privacy framework to safeguard its citizens’ data.