Payment Data Systems Announces Record Transaction Volumes For The Fourth Quarter And For The Fiscal Year

Payment Data Systems (OTCBB:PYDS), an integrated electronic payments solutions provider, announced today that the fourth quarter of 2011 set a record for transactions processed by the company.

Fourth Quarter Processing Results

The fourth quarter's ACH (electronic check) processing volumes were the highest in the history of the company with transaction volumes showing increases of 118% when compared to third quarter of 2011. ACH returned check transactions increased 125% compared to the same period.

Credit card processing volumes for fourth quarter were also the highest of any quarter in the previous two years.

During the month of December we saw credit card dollars processed increase by 40% over November of 2011 and increased by 26% over same period in 2010.

2011 Annual Processing Results

2011’s ACH (electronic check) processing volumes were the highest in the history of the company. The year’s ACH transaction volumes were up more than 800% as compared to 2010.

Credit card processing volumes for all of 2011 were also the highest since 2009. Credit cards dollars processed in 2011 were up 38% over 2010.

Michael Long, CEO, said, "The fourth quarter was a tremendous quarter for us. Our ACH processing volumes more than doubled the dramatic growth we experienced in the third quarter and December’s credit card processing was the best month in the history of the company. This growth has led to a dramatic, positive increase in revenues, gross profit, operating income and net income both for the fourth quarter and the year. We look forward to reporting record earnings for 2011."

Long continued, "We were pleased to end the year as San Antonio, Texas’s top performing stock based upon the article written by David Hendricks, business columnist of the San Antonio Express News. Mr. Hendricks noted that, 'The best San Antonio stock, technically, was Payment Data Systems Inc., which enjoyed a whopping gain of 340.91 percent….'"

Mr. Hendricks’s complete article is located at:

http://www.mysanantonio.com/business/business_columnists/david_hendricks/article/Dividends-helped-investors-in-2011-2439149.php

Our annual earnings for 2011 are anticipated being released in our 10K annual report on or about March 30, 2012.

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, 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.

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