SECURITY AGREEMENT

THIS AGREEMENT made as of the 28 th day of August, 2009 executed by LML PAYMENT SYSTEMS INC. , a corporation continued under the laws of the Yukon, (herein called “ Borrower ”) in favour of THE TORONTO-DOMINION BANK (herein called the “ Bank ”).

WHEREAS , pursuant to a financing letter agreement (the " Credit Agreement ") dated August 17, 2009 between the Borrower and the Bank, the Bank established an intra-day loan facility (the “ Daylight Loan Facility ”) in favour of the Borrower for the purposes outlined therein in an aggregate amount of up to $100,000,000;

AND WHEREAS pursuant to the Credit Agreement   it is a condition precedent to drawdown under the Daylight Loan Facility that the Borrower enter into this Security Agreement;

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the foregoing and other good and valuable consideration, the Borrower agrees with the Bank as follows:

1.1   Defined Terms.   All capitalized terms which are used herein and are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement.  Otherwise, in this agreement, unless there is something in the context or subject matter inconsistent therewith,

“ Advanced Tax Ruling ” means the advance income tax ruling (control number 2008-029959) dated July 17, 2009 from Canada Revenue Agency to legal counsel for the Borrower, as supplemented by a memorandum of supplemental disclosure from legal counsel to the Borrower to Canada Revenue Agency dated August 26, 2009.

“ Beanstream Note ” means the interest bearing promissory note dated August 28, 2009 made by Beanstream Internet   Commerce Inc. in favour of the Borrower in the principal amount of $100,000,000.

“ Closing Date ” means August 28, 2009.

“ Collateral ” shall have the meaning ascribed thereto in Section  2.2 .

“ Credit Documents ” means the Credit Agreement and this agreement.

“ Deposit Account ” means the Borrower’s account #5222228 at branch 9900 of the Bank.

“Directions to Pay” means the directions to pay to the Bank dated August 28, 2009 executed by the Borrower.

“ Insolvency Event ” means, with respect to any Person, that such Person does not pay or perform its obligations generally as they become due or admits its inability to pay or perform its debts generally, that such Person commits an act of bankruptcy within the meaning of the Bankruptcy and Insolvency Act (Canada), any Insolvency Proceeding is instituted by or against that Person, or that Person takes corporate, partnership or other internal management action to authorize any of the actions set forth above in this definition.

“ Insolvency Law ” means the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada) or any other like, equivalent or analogous legislation of any jurisdiction, domestic or foreign.

“ Insolvency Proceeding ” means, with respect to any Person, any proceeding contemplated by any application, petition, assignment, filing of notice or other means, whether voluntary or involuntary, under any Insolvency Law seeking any moratorium, reorganization, adjustment, composition, proposal, compromise, arrangement, administration or other like or similar relief in respect of any or all of the obligations of such Person, seeking the winding up, liquidation or dissolution of such Person or all or any part of its property, seeking any judgment or order declaring, finding or adjudging such Person insolvent or bankrupt, seeking the appointment (provisional, interim or permanent) of any receiver or resulting by operation of law, in the bankruptcy of such Person.

“ Lien ” means (i) any right of set-off or combination of accounts intended to secure the payment or performance of an obligation, (ii) any interest in property created by way of mortgage, pledge, charge (whether fixed or floating), lien (statutory or other), trust, deemed trust, assignment by way of security, hypothecation, security interest, hire purchase agreement, conditional sale agreement, sale/lease back transaction, deposit arrangement, title retention, capital lease, discount, factoring or securitization arrangement on recourse terms; (iii) any preference, priority, adverse claim, levy, execution, seizure, attachment, garnishment or other encumbrance which binds property, and (iv) any agreement to grant any of the foregoing rights or interests described in clauses (i) to (iii) inclusive of this definition.

“ Newco ” means 0858669 B.C. Ltd.

“ PPSA ” means the Personal Property Security Act (British Columbia).

“ Proceeds ” shall have the meaning ascribed thereto in Section 2.2 .

“ Proposed Transactions ” shall have the same meaning herein as in the Advanced Tax Ruling.

“ Secured Obligations ” means all present and future indebtedness, liability and obligations of the Borrower to the Bank under or pursuant to the Credit Documents.

1.2   Other Usages.   References to “this agreement”, “hereof”, “herein”, “hereto” and like references refer to this Security Agreement and not to any particular Article, Section or other subdivision of this agreement.  A reference in this agreement to another agreement refers to that other agreement as it may be amended, modified, supplemented, restated or replaced from time to time.  A reference in this agreement to a statute refers to that statute as it may be amended and to any restated or successor legislation of comparable effect.

1.3   Number and Gender.   Where the context so requires, the singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders.

1.4   Headings.   The insertion of headings in this agreement is for convenience of reference only and shall not affect the construction or interpretation of this agreement.

1.5   Currency.   Unless otherwise specified herein, all statements of or references to dollar amounts in this agreement shall mean lawful money of Canada.

1.6   Applicable Law and Attornment Clause.   This agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties hereby attorn to the courts of the Province of British Columbia and agree that those courts shall have non-exclusive jurisdiction to determine all disputes relating to this agreement.

1.7   Prohibited Provisions.   In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this agreement shall be construed as not containing such provision or such part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof, and all other provisions hereof which are otherwise lawful and valid shall remain in full force and effect.

1.8   Time of the Essence.   Time shall in all respects be of the essence of this agreement, and no extension or variation of this agreement or any obligation hereunder shall operate as a waiver of this provision.

1.9   Consents, Approvals, etc .  Whenever the consent, approval, acceptance, endorsement or confirmation of a party hereto is required in a particular circumstance, unless otherwise expressly provided for herein, such consent, approval, acceptance, endorsement or confirmation shall not be unreasonably withheld or delayed by such party.

2.1   Grant of Security Interest.   As general, continuing and collateral security, without impairment or novation, for the due payment and performance of the Secured Obligations, the Borrower hereby assigns, transfers and sets over to the Bank, and grants to the Bank a security interest in, the Collateral.

2.2   Description of Collateral.   A security interest is taken in all of the following:

collectively referred to as the “ Collateral ”.

2.3   Attachment of Security Interest.   The parties hereby acknowledge that:

The parties further agree that the security interests created by this agreement are intended to attach, as to all the Collateral in which the Borrower now has rights, when the Borrower executes this agreement, and, as to all Collateral in which the Borrower only has rights after the execution of this agreement, when the Borrower first has such rights.  For certainty, the Borrower confirms and agrees that the security interests created by this agreement are intended to attach to all present and future Collateral of the Borrower and each successor of the Borrower.

2.4   Authorization.   The Bank is hereby authorized to hold all money credited to the Deposit Account as general, continuing and collateral security, without impairment or novation, for the due payment and performance of the Secured Obligations, and to refuse to honour any cheques or orders for the payment of money which the Bank may consider would impair the value of the security interests created by this agreement.  The Borrower further authorizes the Bank to charge against any of the Collateral any of the Secured Obligations as the same may become due and payable.

2.5   No Prejudice.   It is understood that if the Bank permits the Borrower to make withdrawals from the Deposit Account of any money credited thereto, such permission shall be without prejudice to the rights hereby conferred upon the Bank to hold such money as security as aforesaid or to charge against same any of the Secured Obligations and is not to be construed as a waiver by the Bank of such rights.

3.1   Warranties and Covenants.   The Borrower hereby warrants, covenants and agrees with the Bank as follows: