Payment Data Systems, Inc. (OTCBB: PYDS) an integrated electronic payments solutions provider, today announced it has signed a Letter of Intent to acquire 100% of the assets of Electronic Recovery Systems LLC.

The specific terms of the Letter of Intent were not disclosed.

Commenting on the acquisition, Michael Long, Chairman and CEO of Payment Data Systems, said, “We are truly excited about the pending acquisition of ERS as they represent true leadership in the ACH return processing market. ERS is currently generating over $1,200,000 in annualized revenues and $300,000 in annualized EBITDA with minimal personnel. Through the combined synergies and downsizing to a more efficient sales force, we can reasonably expect an increase in EBITDA to over $800,000 annually after integration of the acquisition. ERS offers a variety of world-class ACH processing solutions, including Return Check Services, Electronic Check Conversion, Consolidated Returns, Check Guarantee, and Check Verification.”

Long continued, “We believe ERS is a highly compatible acquisition by virtue of their strong presence in the ACH processing market which is underscored by their impressive customer list of recurring billers and Fortune 1000 merchants. These relationships will open up new revenue opportunities for the combined Payment Data Systems family of companies to engage in cross selling, acquisitions and creating a unified payments processing company, where merchants have one source for all of their payment services. Furthermore, this acquisition is expected to be highly accretive to our earnings, as well as being aligned with our sales and marketing strategies. The immediate overall financial effect of the transaction is anticipated to make Payment Data Systems a profitable company that generates cash of at least $200,000 per quarter.”

The Letter of Intent is non-binding and is dependent upon both organizations completing satisfactory due diligence, the receipt of acceptable financing, and the completion of acceptable closing documents containing customary terms and conditions.

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: www.paymentdata.com, www.ficentive.com, www.zbill.com

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