PYDS Provides Update

Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider, is providing an update to shareholders and other stakeholders of the company.

We will be filing our 10K on or before April 15, 2011 which will be in compliance with the guidelines for a normal extension as granted by the SEC. At which time, we will report that the company continues to be debt free and had an ending cash balance of over $1MM at the close of 2010.

We continue to grow the company in ways our shareholders expect. As you will recall, we previously announced that 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.

We believe the Q1 2011 processing volumes will be higher than the fourth quarter of 2010. The volumes should be the highest volumes we have processed in over a year.

An additional item of interest is to say that we have secured a new sponsoring bank for our prepaid card issuance and will provide more details on the relationship in the near future. We have already started the process of converting FiCentive’s existing card portfolios to the new bank.

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

Website: http://www.paymentdata.com, www.ficentive.com, www.zbill.com

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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.

Copyright Business Wire 2010

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