SAN ANTONIO, TX--(MARKET WIRE)--Jan 24, 2005 -- Payment Data Systems, Inc. (OTC BB:PYDS) an Integrated Payments Solution Provider, announced today that it has signed a multi-year agreement with Online Insurance Services, Inc. (OIS) of Orange Park, FL, to provide payment services for their insurance clients.

This is the first entry of PDS into the highly adaptive insurance industry. The anticipated initial transactional value of the agreement is approximately $3 million per year based on current volume.

Louis Hoch, President and COO of Payment Data Systems stated, "We are very enthusiastic about the agreement with OIS and the fact they have chosen PDS to be the payment provider to their insurance clients. As our initial entry into this industry segment, we don't believe we could have a more viable partner than OIS. OIS has experienced tremendous growth of more than 400% year over year for the past four years. Given the fact that they are predicting similar results for the coming year, PDS foresees immediate value and significant potential in this agreement for both companies."

"Payment Data Systems has streamlined our processes and provided faster turnaround than previous vendors. Their innovative Internet capabilities have opened new markets for us. PDS is more than able to keep up with our rapid growth," said Fred Stover, President of Online Insurance Services, Inc.

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.

Payment Data is the owner of the electronic bill payment portal, http://www.billx.com. billx.com has the ability to transmit electronic payments to thousands of national billers.

For additional information, visit www.paymentdata.com.

Contact: Michael Long, Investor Relations, Payment Data Systems, Inc. 210-249-4040.

About Online Insurance Services, Inc.

Online Insurance Services, Inc. (OIS) is a privately held corporation formed for the purpose of providing insurance-based consumer products with the capability for web enrollments and services as a Third Party Administrator (TPA).

OIS provides a full suite of software products so that clients can manage their customers and their business. All administrative functions such as agent commissions, client billing, and customer support reside on the web and are accessed over a secure Internet connection.

Both the Internet version (WEBENROLL) and the Laptop version (APPWRITER) software systems are multi-company and multi-product platforms. OIS maintains products from seven insurance companies and fourteen non-insurance companies in its enrollment databases. OIS currently has over 30,000 customers under management from twenty-two clients with over 500 agents selling products.