Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider, today announces, on an unaudited basis, the payment processing projections for the first quarter of 2011 and provides an update on the selection of a new sponsoring bank for its card issuing division, FiCentive.

We expect our payment processing volumes for the first quarter of 2011 to be higher than the fourth quarter of 2010. The volumes should be the highest volumes we have processed in over a year.

As previously announced, December processing volumes were the highest of any month in 2010. Credit cards dollars processed in December were up 22% over November 2010. The fourth quarter processing volumes were the best of any quarter in 2010. Credit cards dollars processed in the fourth quarter were up 31% over the third quarter of 2010.

On another topic, we have finalized negotiations with a new sponsoring bank for our prepaid card issuance. We expect to sign the final agreement in the next week. We have already started the process of converting FiCentive’s existing card portfolios to the new bank.

Michael Long, Chairman and CEO of Payment Data Systems, said, “I am very pleased to see the momentum in transaction growth that was created at the end of 2010 has continued into 2011. As we look into 2011 and beyond we remain very enthusiastic about our ability to grow all segments of our businesses of payment processing, prepaid card processing, and bill payment processing. With the completion of the new bank agreement, we can continue to provide innovative prepaid products and services for our corporate customers.”

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.

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