San Antonio, TX, June 27, 2005 -- Payment Data Systems, Inc. (OTC BB: PYDS) an integrated electronic payments solutions provider, today announced that it continues to experience significant growth quarter over quarter both in the total dollar value and volume of transactions being processed.

With June nearly completed and closing our second quarter, we can project, on an unaudited basis, that both the transaction and dollar value volumes for June will show as PDS' best processing month to date. Before this month, March of this year was the highest transaction processing volume in our history.

PDS continues to experience quarter to quarter percentage growth in high double digits both in terms of the number of transactions (ACH and Credit Card) as well as the value of the transactions.

"We have been pleased to see a strong period of sustained growth in our business since we began the significant ramping of revenues late last year. Projecting our numbers into the remainder of June, we do not see anything that suggests the Q2 growth percentages will result in anything different from the prior trend," said Michael Long, CEO.

Long added, "We see this new benchmark as one that reinforces a reasonable expectation of continued growth as we continue our march toward profitability. Furthermore, it remains an endorsement by the market of the viability and effectiveness of our solutions."

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.