A major American private equity firm is set to acquire a payment processing company that handles a significant portion of payment transactions in Canada. The Royal Bank of Canada and Bank of Montreal have announced the sale of their jointly owned Moneris to Francisco Partners for $2 billion. Following the announcement of the deal, both RBC and BMO have seen a positive impact on their shares, with RBC expecting to gain approximately $475 million and BMO $600 million from the sale.
Despite the financial gains for the banks, concerns have been raised by industry analysts about the potential negative implications for Canada’s digital sovereignty, especially in light of the country’s ongoing trade tensions with the U.S.
The concept of digital sovereignty refers to a nation’s ability to control its digital assets independently. 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 defend Canada’s digital sovereignty against potential threats from foreign entities. Sharon Polsky, president of the Privacy and Access Council of Canada, echoed these concerns, highlighting the risk of Canadians’ data being accessible to foreign governments and law enforcement agencies.
Moneris, which services over 325,000 points of commerce and processes more than five billion transactions annually, is used by numerous businesses in Canada. Polsky warned that the acquisition could potentially expose Canadians’ data to foreign entities, raising issues of privacy and security.
The timing of the deal amid trade tensions between Canada and the U.S. has further fueled apprehensions about the potential misuse of transaction data for trade negotiations. Polsky and Independent Canadian Senator Colin Deacon expressed worries about the U.S. government leveraging Canadians’ data for various purposes.
Both BMO and RBC maintained that Moneris’s commitment to Canadian businesses would remain unchanged under the new ownership. However, the lack of robust privacy legislation in Canada has raised concerns about the protection of digital privacy and sovereignty in the country.
While the Canadian government has introduced legislation like Bill C-36 to enhance privacy protections, experts like Polsky believe that more comprehensive measures are needed to safeguard data sovereignty. The bill proposes significant changes to Canada’s privacy framework, emphasizing privacy as a fundamental right and requiring companies to assess the privacy impact of transferring data outside the country.
Despite these efforts, concerns persist about the adequacy of current privacy laws in addressing the challenges posed by the Moneris deal and potential threats to digital sovereignty. The sale of Moneris is still pending regulatory approvals and is expected to close by the end of the banks’ fiscal first quarter in 2027, leaving Canada facing challenges in ensuring robust data protection and sovereignty.