A major American private equity firm is set to acquire a prominent payment processing company in Canada that handles about one-third of all payment transactions in the country. The Royal Bank of Canada and Bank of Montreal have revealed plans to sell their joint venture, Moneris, a leading provider of commerce solutions in Canada, to Francisco Partners for $2 billion. Following the announcement of the deal, both RBC and BMO experienced stock price increases, with RBC projected to receive approximately $475 million post-tax and BMO $600 million from the transaction.

However, concerns have been raised by some industry analysts regarding potential negative implications for Canada’s digital sovereignty amidst the ongoing trade tensions with the United States. Digital sovereignty encompasses a country’s ability to maintain control over its digital assets, as highlighted by AI Minister Evan Solomon advocating for the establishment of a sovereign digital economy free from external influence.

In a joint open letter addressed to Prime Minister Mark Carney, numerous experts emphasized the importance of safeguarding Canada’s digital sovereignty in light of the Moneris deal. Sharon Polsky, President of the Privacy and Access Council of Canada, expressed worries about the implications of Canadian data being accessible to foreign entities, including law enforcement agencies. Moneris, a vital player in Canada’s business landscape, services over 325,000 commerce points and processes more than five billion transactions annually.

As the trade war between Canada and the U.S. continues, concerns have been raised about the potential exploitation of transaction data for trade negotiation purposes. Colin Deacon, an Independent Canadian senator, highlighted the risks associated with the U.S. government accessing Canadian data through this acquisition. Both BMO and RBC refrained from providing additional comments on the deal, emphasizing that Moneris’s commitment to serving Canadian businesses will remain unchanged under new ownership.

With Canada’s privacy legislation still in progress, Polsky underscored the urgent need for enhanced digital privacy protection measures. The introduction of Bill C-36, the Protecting Privacy and Consumer Data Act, aims to revamp Canada’s private sector privacy regulations and reinforce privacy as a fundamental right. Despite these efforts, Polsky criticized the government’s attempts to update privacy laws, stating that they do not adequately address data retention within Canada for national security reasons.

The sale of Moneris is pending regulatory approvals, including clearance under the Competition Act, and is anticipated to be finalized by the end of the first fiscal quarter of 2027 for the banks involved. The evolving landscape of digital sovereignty and data privacy regulations in Canada underscores the need for comprehensive measures to safeguard the country’s digital assets and ensure compliance with evolving privacy standards.