- Online Bill Payment and Stored Value Cards Now Linked - SAN ANTONIO, Sept. 6 /PRNewswire-FirstCall/ -- Payment Data Systems, Inc. (OTC:PYDS) (BULLETIN BOARD: PYDS) an integrated electronic payments solutions provider has completed its transition into its own, proprietary, electronic bill payment engine at http://www.bills.com/. This transition should provide a significant increase in the net margin percentages we experience from the service as well as provide the realization of the increased functionality we announced last year. A significant part of this new implementation of Bills.com's functionality is the ability to link a stored-value card (SVC) into the system as a bill paying vehicle. This now adds a new and unique payment vehicle to the mix of traditional banking accounts such as checking and savings. The feature provides the community of 40 million plus persons that are defined as unbanked and underbanked to have the same advantages of online financial management as those that utilize those more traditional bank products. It is also an attractive feature to over-banked persons that have a need to consolidate bank account payments and move funds among different financial institutions. We believe the expectation of increased interest in Private Labeled sites is being realized based on the inquiries we are now receiving. A great deal of this interest is being generated by various debit card companies who want to have their SVCs and bill payment linked in an online environment. The following is a brief description of the key strategic and differentiating functions of Bills.com: * Stored Value Card Bill Payment - This allows a stored value card account to be linked to bill payment. This is a site-specific implementation of the patent we applied for earlier and remains completely unique in the bill payment/SVC marketplace. It is an integral component of our vision of having SVCs linked into bill payment, reloading, and acquisition into one site * Pay Anyone with an e-mail address - This service enables users to electronically exchange money with any individual with an e-mail address including online auction sellers. This is of great benefit for those that may be seeking a lower cost or a more convenient alternative to PayPal(R).for their eBay(R) or other online auction payments. * Payment Account Transfers - Currently, consumers have the ability to set up numerous stored value cards, checking, savings, brokerage and money market accounts from which they can make payments. Now, consumers have the ability to conveniently transfer money between these payment accounts allowing consumers to manage all their finances in one location. * Bills.com Private Label Offering - Card Issuers, Portals and Financial Institutions that choose to offer online facilities to their subscribers/consumers for bill payment can provide Bills.com functionality as a customer branded offering. * Bills.com Co-Label Offering - Card Issuers, Portals and Financial Institutions that choose to share labeling rights with Bills.com in order to avoid capital expenditure for a private label solution and still have access to all functionality. About Bills.com Bills.com was founded in 1999 and is a wholly owned subsidiary of Payment Data Systems, Inc. Bills.com provides a bank independent, easy, secure and convenient online bill payment service that enables consumers to pay, and manage their bills via the Internet. For more information, visit http://www.bills.com/ or call 210-249-4100. About Payment Data Systems, Inc. Payment Data Systems, Inc., is an Integrated Payments Solution Provider delivering comprehensive, cost-effective solutions to billers and retailers for the processing and management of electronic payments via the Internet, point of sale, or payments taken by Customer Service Representatives or an Interactive Voice Response (IVR). Additional products available from PDS include services and products that can be implemented more quickly and less expensively than the alternative of adding multiple payments companies as these solutions offer a full range of payment processing capabilities. These service offerings include: one time and recurring ACH debits and credits, electronic lockbox and returned check services, Web pay acceptance of credit cards and checks, telephone pay to Customer Service Representatives for acceptance of credit cards and checks, Interactive Voice Response systems which completely automate the payment receiving process, and data warehousing that enable the storage and retrieval of all payment history from one location. These are all managed within a single comprehensive storage and retrieval system thereby providing the customer consolidated tracking and reporting of all payment types regardless of source or channel. Payment Data is the owner of the electronic bill payment portal, http://www.bills.com/. Bills.com has the ability to transmit electronic payments to thousands of national billers. 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, +1-210-249-4040, or email, Web site: http://www.bills.com/ http://www.paymentdata.com/

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