Item 2.03 Creation of a Direct Financial Obligation under an Off-Balance Sheet Arrangement of a Registrant

Pursuant to a security agreement entered into on August 28, 2009 between LML Payment Systems Inc. ("LML" or the "Corporation") and The Toronto-Dominion Bank (the "TD Bank") (the "Security Agreement"), on August 28, 2009, LML borrowed $100,000,000CAD (approximately $91,920,000USD based on the August 28, 2009 noon exchange rate of $0.9192) from the TD Bank pursuant to a credit facility term sheet dated for reference August 17, 2009. As security for the loan, the Corporation granted to the TD Bank security over certain of its assets pursuant to the Security Agreement. The Corporation repaid the loan the same day without incurring any interest, but did pay a non-refundable arrangement fee.

The loan was executed to help put into place a structure that is intended to shelter from tax up to approximately $11,000,000CAD in corporate earnings over the next 10 years. Under the structure, our wholly owned operating subsidiary, Beanstream Internet Commerce Inc. ("Beanstream") will make interest payments on funds owed to the Corporation, which, on a consolidated basis, will shelter future profits from Beanstream's operations by making use of the Corporation's past losses. However, there is no guarantee that LML or Beanstream will make an operating profit in the future.

The transaction has been completed and security granted to the TD Bank is in the process of being discharged. We have no further obligation to the TD Bank pursuant to this arragement.

Item 7.01 Regulation FD Disclosure

The text under Item 2.03 above is hereby incorporated by reference into this Item 7.01.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Security agreement dated August 28, 2009 between LML Payment Systems Inc. and The Toronto-Dominion Bank

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