RBC and BMO are pulling off a POS transaction that can’t be settled with a simple tap.
What happened: RBC and BMO are selling Moneris — the payments business the two banks co-founded in 2000 — to American PE firm Francisco Partners for $2 billion cash.
Why it’s happening: Moneris is still the dominant payments platform in Canada, handling around a third of transactions — practically unchanged from its market share in the 2010s — across some 325,000 business clients. However, RBC and BMO see the writing on the wall as several new entrants have steadily accumulated customers over the past decade.
Why it matters: For banks to keep their payments services competitive with newer options that often provide faster and more flexible platforms, a revamp is required. It seems that many would rather pass on that opportunity, and the spending that comes with it, to others.
Banks in the U.S. and Canada are increasingly offloading part or all of their payment businesses as they look to cut costs and streamline operations. For example, TD sold part of its merchant processing business last year to U.S. fintech Fiserv.
Our take: Surely much of Moneris’ continued dominance is courtesy of legacy customers who haven’t bothered to switch — back when we swiped instead of tapped, it was the only POS we ever saw. Now, when we go to, say, a new cafe, we’re invariably mulling over the tip option on a Block terminal. It might be a strong play for RBC and BMO to cut and run.—QH
