Payment Data Systems, Inc. Now Supports Mobile Credit Card Sales from SmartPhones.

SAN ANTONIO -- Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider, today announced the general availability of a new method for merchants to process credit card sales from remote locations without the need for card terminal devices.

The product is a mobile phone application designed to work with all SmartPhones that are browser enabled phones.

The SmartPhone application, in conjunction with our IPS Express - Pay By Phone application that we announced in September 2006, enables mobile sales and customer service personnel to access the Payment Data Systems Payment interface from a SmartPhone powered device, so they can enter, process, and view credit card payment transactions while out of the office.

Once the sale is authorized and approved, the system provides real time access to view the completed transaction from the merchant's accounting department or the remote person that entered the information.

These mobile technologies are based on the Payment Data Systems enterprise infrastructure -- the same servers and applications that many merchants already use for their payment processing. Thus, this new application features capabilities that provide the same level of support for mobile employees as for those employees in the office.

The system is specifically designed for:

* Events and Concerts;

* Taxis and Limousines;

* Plumbers and Electricians;

* Installers and Repairmen;

* Door to Door Sales;

* Utility Companies' On-Site Collections;

* Flea Market Vendors;

* Any Remote Sales Merchant.

Features of the program include:

* Leverages their existing data (Internet) plan with their cellular carrier;

* Internet reporting;

* Back office or home office or remote personnel can immediately view transactions as soon as a sale is made;

* Comes with Web based virtual terminal to submit payments via the Internet;

* Integrated telephone and Web based transaction reporting through our IPS Select CSR View product;

* Fast merchant setup time - as fast as 24 hours;

* Supports all card types;

* Funds are available in the merchant's bank within 48 hours or less.

"This is a great addition to our mobile-based merchant processing platform," said Louis Hoch, President and COO of Payment Data Systems, Inc. "Removing the need for specific card entry terminals and taking advantage of an existing tool that is carried by tens of millions of people, provides speed, security, and convenience for both the customer and the merchant representative."

To learn more about the system or view an online demonstration, please visit: http://www.paymentdata.com/services.htm

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.

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 Systems Inc. (OTCBB: PYDS) is a registered ISO/MSP of MetaBank and a registered ISO/MSP and TPS/TPP of Merrick Bank.

Payment Data is a Level One PCI compliant Third Party Servicer.

Payment Data's intellectual property includes U.S. Patent Number 7,021,530 that relates to bill payments made with debit and stored value cards.

For additional information, visit www.paymentdata.com. Contact Michael Long for Investor Relations information at 210.249.4040 or email at [e-mail].

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.