RBC and BMO explore $2 billion sale of Canadian payments venture Moneris

Royal Bank of Canada and Bank of Montreal have initiated the potential sale of their joint payments venture Moneris, with sources indicating the transaction could value the business at approximately $2 billion.

Moneris represents one of Canada's largest payment processors, handling one in every three business transactions nationwide. The company was established in 2000 as a joint venture between RBC and BMO, providing digital, mobile, and in-store payment systems for approximately 325,000 merchant locations across Canada.

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The banks are in early stages of exploring a potential Moneris sale, according to four people familiar with the matter who requested anonymity due to the private nature of discussions. Investment banking firms advising on the potential transaction include boutique firm PJT Partners, along with RBC Capital Markets and BMO Capital Markets.

Moneris valuation based on revenue performance

Sources estimate Moneris could achieve a $2 billion valuation, or slightly below that threshold, based on the company's annual revenue generation of nearly $700 million. The revenue-based valuation reflects standard industry multiples for payment processing businesses.

However, completion of a sale remains uncertain, with sources indicating the bank owners could ultimately decide to retain some or all of the Moneris business operations. The potential transaction represents one of the larger Canadian fintech deals under consideration.

Banking industry payments divestiture trend

The potential Moneris sale aligns with broader trends in the North American banking sector, where financial institutions have increasingly divested payment processing operations. Banks have found the pace of digitization requires regular capital investments to maintain competitive positioning in the payments landscape.

Payment processing companies have emerged as willing acquirers, seeking to expand geographic reach and enhance product offerings through mergers and acquisitions. Private equity firms also represent active buyers, attracted by the recurring fee revenue streams that characterize payments businesses.

Recent industry activity includes TD Bank's announcement last month of a strategic partnership with Fiserv regarding its Canadian merchant payments operations, demonstrating continued consolidation in the sector.

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Market response and industry context

BMO, Moneris, and PJT Partners declined to provide comments regarding the potential sale discussions. RBC did not respond to requests for comment about the transaction.

The Canadian payments processing market has experienced significant growth driven by increased digital adoption and electronic transaction volumes. Moneris's market position, processing approximately 33 per cent of Canadian business transactions, positions the company as a valuable asset for potential acquirers.

Payment processing businesses typically generate stable revenue through transaction-based fees, making them attractive targets for investors seeking predictable cash flows. The recurring nature of merchant relationships provides additional stability for payment processors like Moneris.