PAYMENT DATA SYSTEMS CEO PROVIDES SHAREHOLDER BUSINESS UPDATE

San Antonio, TX, September 21, 2004 -- Payment Data Systems, Inc. (OTC BB: PYDS) an integrated electronic payments solutions provider, today announced the availability of a letter to shareholders. Full text of the letter is available at: www.otcfn.com/pyds or www.paymentdata.com.

In the letter to shareholders, Chairman and CEO Michael Long provides a brief history of the Company as well as current information on recent developments and pending projects.

Long said, “While many of our long time shareholders have followed the PYDS story from Billserv.com, we thought it important to bring new shareholders up-to-date on our history as a successful electronic bill presentment and payment (EBPP) provider. The shareholder letter not only provides that information, but also updates all shareholders as to the current status of many of our recently announced projects.”
 

Contact:

     Contact:
     Geoffrey Eiten
     Investor Relations
     OTC Financial Network
     (781) 444-6100 ext. 613
      

Source: Payment Data Systems

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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