A U.S. private equity firm’s $2-billion deal to buy Canada’s largest merchant payments processor is highlighting the stakes of foreign ownership as policymakers push for greater sovereignty over the country’s payment systems. 

On Monday, Francisco Partners announced the all-cash deal to buy Moneris, which handles one in three transactions in Canada and is the country’s last Big Six-owned merchant payments firm. Co-owners Royal Bank of Canada and Bank of Montreal will split the proceeds equally.

The sale is part of a long-term trend of banks selling their merchant payments businesses. Processing payments for businesses is resource-intensive, requiring marketing, developing hardware, integrating software with e-commerce systems and providing customer support. It’s also not as profitable as money-making engines like wealth management and capital markets.

Bhavna Kaushal, a senior consultant at the financial services advisory firm Payments and Partnerships, pointed to European regulators’ efforts to wean companies off American giants like Visa and Mastercard, amid worries the U.S. could shut off access to their networks if relations broke down. U.S. ownership of Moneris raises similar concerns, she said.

“Europe’s been so worried about Visa and Mastercard… because the payments are running on foreign-owned rails. The data is not here,” she said. “This is the flip side of it.”

U.S. President Donald Trump’s trade war with Canada, and his musings about making the country the 51st state, have prompted business leaders and policymakers to examine how deeply the two economies are intertwined, and where Canada can reduce its dependence on its southern neighbour.

One of the biggest sources of U.S. leverage over other countries is its dominance of the financial system. Banks and fintechs rely on American cloud providers like Amazon’s AWS to run their websites, and most large business transactions settle through American banks in U.S. dollars. Visa and Mastercard have also become the backbone of e-commerce.

At Payments Canada’s annual conference in May, CEO Susan Hawkins said Canada should “treat payments as national infrastructure.” Finance Minister François-Philippe Champagne, speaking at the same conference, said “we want Canadians to adopt Canadian solutions” for payments. 

BMO, RBC and Moneris declined to comment on whether the deal raises sovereignty concerns. Francisco Partners did not respond to a request for comment.

Rachel Wasserman, a corporate lawyer and a fellow at the Canadian Anti-Monopoly Project, said private equity ownership also raises concerns. Francisco Partners could saddle Moneris with debt and raise prices to cover the loan payments, she said, which could ultimately be passed on to the payments processor’s small businesses customers. 

“A deal like this can wipe out small businesses,” she said. Francisco Partners did not respond when asked how much of the deal is being funded with debt.

Todd Roberts, head of payments at Deloitte Canada, said the sovereignty concerns tied to the deal are overstated. He pointed out that foreign-owned businesses like Stripe and Adyen, as well as the major credit card companies, already process a significant volume of Canadian payments.

There would be sovereignty concerns if national payments infrastructure, such as the forthcoming Real-Time Rail instant payments system, were foreign-owned, but merchant payments processing is different, Roberts said. “Sovereignty around national payments infrastructure is extremely important. This is not national payments infrastructure.”

The deal is subject to approval by the Competition Bureau and the Bank of Canada, under its new oversight regime for payments companies. That regime also includes a national security review of the ownership of non-bank payments companies.

Wasserman said regulators don’t currently consider the sovereignty implications of business acquisitions. “‘We sold too many of our companies to Americans’—there’s no test for that,” she said.