Canadian Banks Sell Payment Processing Company to US Private Equity Firm

The Royal Bank of Canada and the Bank of Montreal have announced the sale of their jointly owned digital payments processing company, Moneris, to an American private equity firm, Francisco Partners, for approximately $2 billion.

This sale marks a significant shift in the Canadian financial sector, as Moneris handles one in three Canadian payments. With this deal, RBC and BMO will be the last of the big banks to sell their processor to an American owner.

Douglas Sarro, an assistant professor at the University of Ottawa's faculty of law, notes that the sale raises concerns about data sovereignty, as Moneris will now handle a large amount of personal Canadian payment information. He also points out that the sale may be a result of the banks wanting to offload non-profitable operations and focus on wealth management and investment banking.

Sarro emphasizes that while the private equity investors have indicated their plan for Moneris to stay headquartered in Canada, there is still a risk that the infrastructure could be moved to the United States in the future. This has sparked concerns about data security and potential access by foreign governments.