Software provider Tyler Technologies Inc said on Wednesday it will buy payments company NIC Inc for about $2.3 billion in an all-cash deal as more people opt for online services and electronic payments.

NIC shareholders will receive $34 per share in cash, Tyler said, a premium of about 14% to NIC's last closing price.

Olathe, Kansas-based NIC provides digital services that make it easier for people and businesses to interact with government agencies. It serves more than 7,100 federal, state and local government agencies in the United States.

"The pandemic has accelerated the shift by governments to online services and electronic payments as more citizens and businesses are interacting digitally with government," Tyler Chief Executive Officer Lynn Moore said.

Tyler plans to fund the deal with a combination of about $700 million of cash and new debt. The deal is expected to add to Tyler's adjusted earnings in 2021.

The transaction is expected to close in the second quarter of 2021.