Payment Data Systems Reports a Profit for Fourth Quarter

- 2005 Revenue Up 230 Percent from Prior Year -

San Antonio, TX February 23, 2006 Payment Data Systems, Inc. (NASDAQ OTCBB: PYDS) an integrated electronic payments solutions provider, today announced financial results for the quarter and year ended December 31, 2005.

Net income for the quarter ended December 31, 2005 was $428,987, or $0.01 per share, and included a gain on the sale of the billx.com domain name of $911,000, compared to a net loss of $421,799, or $0.02 per share, for the fourth quarter of 2004. Revenues increased 230% to $1,180,753 for the year ended December 31, 2005 from $357,566 for 2004. Net loss for the year ended December 31, 2005 was $1,195,690, or $0.04 per share, compared to a net loss of $1,514,531, or $0.07 per share, for 2004.

Commenting on the results for year, Michael R. Long, Chairman and Chief Executive Officer of Payment Data Systems, said, “We are very pleased to see the year finish on a positive note, continuing the steady growth in revenue year over year, and significant improvements in the overall traction of our business.”

Long added, “We believe we are positioned to begin to put some real distance between ourselves and our competition. Uniquely, PDS offers a single source for electronic payment solutions through its capabilities of merchant acquiring, card issuing, and bill paying through Billx.com. Therefore, we are creating distinct and exceptional product differentiators in the marketplace that will raise the bar of technology, functionality, and execution.”

For further information regarding our financial results for 2005, please read our 10 KSB, which will be filed on or before March 31, 2006.
 
About Payment Data Systems, Inc.

Payment Data Systems is an integrated payment solutions provider to merchants and billers. We provide an extensive set of tailored products to deliver world-class payment acceptance, processing, and risk/fraud management. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. Whether you are in the market for card issuance, payment acceptance or bill payment solutions we have a solution for you.

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

Payment Data is also the exclusive license holder of the rights to market the Carmen Electra gift and prepaid cards. To receive updates on the Carmen Electra card program sign-up at www.carmencard.com
Payment Data Systems, Inc.
Michael Long
Chairman and CEO
phone: 210-249-4040
 
  
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