SAN ANTONIO, Feb. 7 /PRNewswire-FirstCall/ -- Payment Data Systems, Inc. (OTC:PYDS) (BULLETIN BOARD: PYDS) an integrated electronic payments solutions provider, today announced the availability of a letter to shareholders. Full text of the letter is available at: http://www.paymentdata.com/investor.htm . In the letter to shareholders, Chairman and CEO Michael Long provides a recap of the events and progress of the company during the 2005 period. The letter also provides some perspective on the coming year and the events that could develop and be announced. Long said, "As we have closed 2005 and we are getting well into 2006, we thought it would be appropriate to have some recap of an exciting year and an outlook for the coming year. We are very positive about this New Year and feel it is important to share that excitement with our shareholders." 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/ , which 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 http://www.carmencard.com/ . 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: Investor Relations, Michael Long of Payment Data Systems, Inc., +1-210-249-4040, Web site: http://www.paymentdata.com/ http://www.paymentdata.com/investor.htm http://www.billx.com/ http://www.carmencard.com/

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