(PYDS) Predicts Record Yearly Revenues and Income

Payment Data Systems Announces Record Transaction Growth for the Third Quarter of 2014

SAN ANTONIO, Texas, Oct. 7, 2014 — Payment Data Systems (OTCQB:PYDS), an integrated electronic payments solutions provider, announced today that it achieved all-time records related to transactions processing in the third quarter of 2014.

Total dollars processed for the third quarter of 2014 set a new record for the company exceeding $796,000,000.

Credit card processing volumes third quarter of 2014 were the second highest in the history of the company for quarterly transaction volumes. Credit cards dollars processed during third quarter of 2014 were up 16% over the same time period in 2013. Credit cards transactions processed during third quarter of 2014 were up 59% over the same time period in 2013.

The third quarters of 2014’s electronic check transaction volumes were up 2% and returned check transactions were up 19% as compared to second quarter of 2014.

Michael Long, CEO, said, “I am very pleased with the company’s tremendous growth in transactions this year. It should be noted that in early September a number of our sales agreements came up for renewal; we were able to renew all affected agreements with higher profit margins. The new margins had positive effects on earnings during the last month of the third quarter and will also create positive changes in earnings for the fourth quarter and into the foreseeable future. The fourth quarter is traditionally our best quarter of the year for transactions processed. We expect charitable giving to be up this year and our large customer base of churches and charities should lead to record transactions in Q4. We look forward to closing out the year with record annual revenues and income.”

Our quarterly earnings for the third quarter of 2014 are anticipated to be released in our 10Q report on or about November 14, 2014.

About Payment Data Systems, Inc.

Payment Data Systems is an integrated payment solutions provider to merchants and billers. The organization provides an extensive set of products to deliver world-class payment acceptance. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. The strength of the company is its ability to offer specifically tailored solutions for card issuance, payment acceptance and bill payments.

For additional information, visit www.paymentdata.com. Contact Michael Long for Investor Relations information at 210.249.4040 or email at ir@paymentdata.com.

Website: http://www.paymentdata.com, www.ficentive.com, www.zbill.com

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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 intents, beliefs 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 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.

CONTACT: Michael Long
         Investor Relations
         210.249.4040
         ir@paymentdata.com