Payment Data Systems Has Best Month since 2007

Business Wire, March 12, 2009

SAN ANTONIO -- Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider today announced that February was our third best merchant processing month in our history for dollars processed. When compared to prior periods, we gained 10% compared to last month and gained 7% over February 2008.

Regarding transactions processed, February increased 3% over January and increased by 30% when compared to February 2008.

Louis Hoch, PDS’ President and COO said, "Needless to say, we are excited about the momentum created in February especially since it had fewer days in the month. We are on track to have our second highest quarter in the history of the company in terms of processing dollars. We haven’t experienced a better month in the last 17 months of our acquiring business."

About Payment Data Systems, Inc.

Payment Data Systems is an integrated payment solutions provider to merchants and billers. The organization provides an extensive set of products to deliver world-class payment acceptance. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. The strength of the company is its ability to offer specifically tailored solutions for card issuance, payment acceptance and bill payments.

For additional information, visit www.paymentdata.com. Contact Michael Long for Investor Relations information at 210-249-4040 or email at ir@paymentdata.com.

Website: http://www.paymentdata.com

FORWARD-LOOKING STATEMENTS DISCLAIMER:

Except for the historical information contained herein, the matters discussed in this release include certain forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements regarding our and management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these factors have affected, and in the future could affect our businesses and financial results in the future and could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to our management. We assume no obligation to update any forward-looking statements, except as required by law.