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The U.S. private equity firm will pay cash for the payments processor, which handles one in three transactions in Canada. Co-owners Royal Bank of Canada and Bank of Montreal will split the proceeds equally. (The Logic)
Talking point: The deal marks the end of the merchant payments business for Canada’s big banks, all of which have sold or outsourced the enterprise. Processing payments for businesses is resource-intensive and involves marketing, developing hardware, integrating software with e-commerce systems and providing customer support—all for a business line that’s not as profitable as money-making engines like wealth management and capital markets. RBC and BMO both said in releases that the transaction will modestly improve their capital ratios and won’t have a meaningful impact on earnings.
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