Payment Data Systems Announces December Processing Volume Highest in 2008

Business Wire, Jan 19, 2009

SAN ANTONIO -- Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider, today announced a review of its credit card processing volumes for the fourth quarter on an unaudited basis.

December Processing Results:

Dollars processed (the metric that drives revenue) increased 25% in December compared to the previous month and grew 5% over December 2007. Transactions processed increased 11% from the previous month and 13% from December 2007. It should be noted that December's dollar volume was the highest for any month in 2008 and is the third highest in our history.

Q4 Processing Results:

In dollars processed (the metric that drives revenue), our volume increased 21% from the third quarter. As for transactions processed, our volume grew 20% over the previous quarter and 7% over Q4 2007.

Commenting on the results, Michael R. Long, Chairman and Chief Executive Officer of Payment Data Systems, said, "We are extremely pleased with these preliminary results. I view it as a validation of our business model and it clearly demonstrates our ability to grow organically. Furthermore, I believe we can also surmise from these results that our targeted marketing strategy has resulted in a customer base that is reasonably insulated from the current overall economic environment."

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.

Payment Data is the owner of the electronic bill payment portal, http://www.billx.com, which has the ability to transmit payments to thousands of national billers.

Payment Data Systems Inc. (OTCBB: PYDS) is a registered ISO/MSP of MetaBank and a registered ISO/MSP and TPS/TPP of Merrick Bank Corp., South Jordan, UT.

Payment Data's intellectual property includes a perpetual license of U.S. Patent Number 7,021,530 that relates to bill payments made with debit and stored value cards.

Payment Data holds the exclusive license to market the Natalie Gulbis Gift MasterCard (www.nataliegulbismastercard.com.)

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.