Minnetonka-based electronic commerce company Digital River Inc. announced Monday that it is acquiring a Canadian online payment processing firm for nearly $103 million in cash.

Digital River said its acquisition of LML Payment Systems Inc. of Vancouver for $3.45 per share will help it to expand its global online payment processing business to companies of all sizes.

"This investment reflects our ongoing commitment to expanding our Digital River World Payments solution and continuing to diversify our global commerce business across multiple vertical markets," Joel Ronning, Digital River's CEO, said in a statement.

Ronning said both companies are strong in the online payments market, including "card-not-present'' processing, in which transactions are conducted without swiping a card. Web purchases and telephone orders are typical of card-not-present' purchases.

LML Payment Systems processes online payments for more than 14,000 small to mid-sized merchants. Digital River said it intends to leverage LML Payment Systems' banking, merchant, reseller and developer relationships for further expansion.

Together the companies will handle more than $20 billion in online transactions across a broad range of industries, including software, consumer electronics, government, utilities, event registration and mobile payments, according to a statement issued by both companies.

Digital River stock has been volatile in recent months with double-digit percentage drops in May and August as the company has reported uneven financials and forecasts. The shares traded as high as $18.91 in April but dropped in early August to about $14 after disappointing quarterly results.

LML Payments Systems has reported three straight quarters of declining revenue and earnings.

Investors welcomed the merger announcement: Digital River's share price opened down in the morning session but recovered to close up 10 cents per share or 0.6 percent to $16.90.

Shares of LML Payment Systems had been down 22 percent this year prior to the merger announcement. The $3.45 per share offer was an 85 percent premium over LML's closing price on Friday.

LML shares closed Monday at $3.40 per share, rising $1.54.

The acquisition has been approved by the boards of directors of both companies, and is expected to close during the fourth quarter of 2012 or the first quarter of 2013.

Staff writer Patrick Kennedy contributed to this report. David Shaffer • 612-673-7090