Payment Data System's Successful Qualification for the Microsoft(R) .NET Connected Logo Opens Door to Future Customers - Qualification Leads to Contracting of an Industry Leader - SAN ANTONIO, June 1 /PRNewswire-FirstCall/ -- Payment Data Systems, Inc. (OTC:PYDS) (BULLETIN BOARD: PYDS) today announced that it has successfully qualified for the Microsoft .NET Connected Logo. The Microsoft .NET Connected logo is used to identify applications, XML Web services, and hardware devices that meet a set of technical specifications as defined by the logo program criteria, and are licensed pursuant to a valid Microsoft .NET Connected logo license agreement with Microsoft. In anticipation of achieving this qualification and delivering high impact, state of the art solutions, PDS has completed the contracting of a high profile industry leader. The specific announcement will be forthcoming within the next two weeks. The Microsoft .NET web service for ACH, IPS ACH Gateway, provides real- time feedback on eCheck acceptance and verification and is integrated with all of Payment Data's verification, fraud, risk and customer service offerings. Our enhanced Microsoft .NET web service Verification and Risk tool is designed to perform extended fraud and risk management by conducting commercially reasonable check validations and buyer authentications. We are able to verify the validity of a bank routing number and consumer's bank account status. For more features, please see http://www.paymentdata.com/v2/IPSACHGateway.htm . "We are very pleased by the recognition that comes with this qualification and certification which will allow us to enjoy the rights and privileges extended by Microsoft for the .NET Connected Logo program. Furthermore, it has already led to new high profile prospects that desire the latest in technology solutions and one of those prospects has become a contracted customer," said Louis Hoch, President & COO. Mr. Hoch added, "This latest step of providing highly effective and technology driven solutions in a demand driven marketplace continues to distinguish us from competition." 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, Inc., +1-210-249-4040, or Web site: http://www.paymentdata.com/ http://www.paymentdata.com/v2/IPSACHGateway.htm http://www.bills.com/

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