E-commerce firm Digital River Inc. of Eden Prairie said Wednesday that it will pay $10 million to acquire a European e-commerce company that enables consumers to buy "virtual" items while playing online video games.

Digital River, which operates online stores for software companies, consumer electronics manufacturers and some other firms, said it will acquire the Austrian firm Fatfoogoo for about $10 million in cash. If certain financial targets are met, Fatfoogoo shareholders would receive an unspecified additional amount.

Firms such as Fatfoogoo provide "micro transaction" software that helps online game companies sell players "virtual" game gear such as weapons, body armor or evil spells to cast on others. Social media services such as Facebook have helped popularize micro transactions by encouraging users to play games such as FarmVille and Vikings of Thule that sell virtual goods.

The Fatfoogoo software allows game players to purchase items using credit cards, debit cards and prepaid cards or by billing cell-phone accounts. The company was founded in 2006.

"The sale of virtual goods through micro transactions continues to grow in popularity with consumers and is establishing new revenue models for the games industry," Digital River CEO Joel Ronning said.

Digital River said that combining its operations with those of Fatfoogoo will enable it to offer game companies a more comprehensive marketing service. Last year Digital River earned $49.8 million on revenue of $403.8 million.

Steve Alexander • 612-673-4553