MasterCard Inc. will buy U.K. payment services company DataCash Group Plc for $520 million in cash to expand its online commerce business and take market share abroad.

The world’s second-largest credit and debit card payment processing network said it is paying  a 54 percent premium to DataCash’s Wednesday closing price. DataCash’s shares rose to a 10-year high.The deal will improve MasterCard’s ability to process payments online, especially in Europe and emerging markets, the company said. Its new chief executive, Ajay Banga, is trying to boost the company’s profits by developing its online and mobile payments processing business.

Merchants pay companies such as DataCash to process customer payments online and for fraud prevention. DataCash takes online payments from customers via Visa Inc.’s cards, MasterCards, eBay Inc.’s PayPal and other services.

MasterCard and Visa are trying to compete with PayPal, synonymous with online shopping in the minds of many consumers. But Banga said Thursday he does not intend to change DataCash’s relationship with PayPal.

Banga is also playing catchup with Visa, which last month bought U.S. payment processor CyberSource Corp. for $2 billion.

CyberSource has 295,000 merchant clients, while DataCash worked with 1,400 merchants in 2009.

“(DataCash) is clearly a smaller player, but they appear to have a very strong presence in Europe,” said Signal Hill analyst Mayank Tandon.

“Visa has a stronger presence (in e-commerce), and they bought the highest-quality asset in the space, but there’s a long runway of growth here in the market,” he added.

MasterCard shares fell about 1.3 percent, to $210.16, in early afternoon trading Thursday. DataCash surged 51.8 percent, to 356 pence, on the London Stock Exchange.