Payment Data Delivers the Industry's First Microsoft.NET-Connected Web Service for Acceptance of ACH/eCheck Payments

SAN ANTONIO, TX – Payment Data Systems, Inc. (OTC Bulletin Board: PYDS) an integrated electronic payments solutions provider, announced today that it has successfully delivered its IPS ACH Gateway™ with the Microsoft®.NET Framework for developers to implement the processing of ACH/eCheck payments. 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. Payment Data and our customers understand the inherent risk associated with traditional methods for accepting checks electronically. The previous version of our IPS ACH Gateway™ gave our customers the tools to mitigate fraud and limit risk.

Our enhanced Microsoft®.NET web service Verification and Risk tool is designed to perform extend 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. Additional features include:

• Allows lookup of bank name by routing number
• Quickly identifies data entry errors of routing number
• Identifies inactive or retired routing numbers due to bank merger or acquisition
• Identifies credit unions and financial institutions whose rules do not allow debit or credit ACH transactions to post to savings or checking accounts
• Recognizes items drawn on closed accounts
• Recognizes items drawn on accounts currently in overdraft status
• Recognizes consumer accounts that are in industry negative databases

The benefits that a PDS customer can expect to realize are:

• Reduces “administrative” returns, allowing you to identify bad routing numbers and enables you to make the correction at the point of acceptance instead of after the sale
• Reduces cost associated with administrative return items
• Reduces “Account Closed” and “NSF” returns
• Allows your company to recognize potentially fraudulent transactions
• Reduces cost associated with return items and collections

“We are already experiencing some early successes with IPS ACH Gateway™ some from existing clients and some from prospects that are evaluating our services. One prospect includes a major bankcard program that found us through our successes in the debit card space. I believe this new offering will provide us a competitive advantage for a period of time and I am excited about our company’s capabilities to deliver such a leading edge service,” said Louis Hoch, President & COO.