SAN ANTONIO, Jan. 18 /PRNewswire-FirstCall/ -- Payment Data Systems, Inc. (OTC:PYDS) (BULLETIN BOARD: PYDS) an integrated electronic payments solutions provider, today announced that credit card transactions processed in the fourth quarter were the Company's highest for any quarter to date. December was also the Company's best processing month to date. Both the transaction and dollar value volumes for December are PDS' highest for any month to date. December's numbers better November's, our previous highest month, and are 184% higher than transactions processed and 114% higher than dollars processed in December 2004. Transaction and dollar volumes for the fourth quarter were even more exciting. The fourth quarter transactions were 343% higher than transactions processed and 215% higher than dollars processed in the same quarter from the previous year. In December the Company paid off its outstanding debt balance and is now debt free. The debt was paid using cash to prevent share dilution. PDS will report a profitable quarter when we release the results from the fourth quarter. Michael Long, Chairman and CEO of Payment Data Systems, Inc, said, "We continue to be highly motivated by the progress of the company throughout the 2005 calendar year and the tremendous momentum and opportunity that is being carried into 2006. Very soon, we will be releasing a recap of the 2005 year and more details on the strategic plans for '06." Audited results for the fourth quarter and for the year will be made available to the public by or on March 31, 2006. About Payment Data Systems, Inc. Payment Data Systems is an integrated payment solutions provider to merchants and billers. We provide an extensive set of tailored products to deliver world-class payment acceptance, processing, and risk/fraud management. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. Whether you are in the market for card issuance, payment acceptance or bill payment solutions we have a solution for you. 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 is also the exclusive license holder of the rights to market the Carmen Electra gift and prepaid cards. To receive updates on the Carmen Electra card program sign-up at http://www.carmencard.com/ . For additional information, visit http://www.paymentdata.com/ . Contact Michael Long for Investor Relations information at 210.249.4040 or email at . 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. DATASOURCE: Payment Data Systems, Inc. CONTACT: Michael Long, Investor Relations of Payment Data Systems, Inc., +1-210-249-4040, or Web site: http://www.billx.com/ http://www.carmencard.com/ http://www.paymentdata.com/

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